Mortgage lending booms!

According to CBA’s internal data, Australian mortgage lending surged again in August:

New lending for housing rose again in August. A recovery in lending is one factor behind our view that dwelling prices will fall only modestly over the next 6months. And we expect dwelling prices to rise solidly in H2 21 (see here).

The average loan size was steady in August. The average loan size is higher than a year ago as lower mortgage rates mean that people are able to service a higher level of debt for a given level of income.

The share of fixed rate lending remained at a high level in August. The share of fixed rate lending has lifted for both owner-occupiers and investors. Fixed mortgage rates are generally lower than variable rates at present.

Lending for renovations is growing at a solid pace. Many people are undertaking home renovation work while spending more time at home. That said, stage 4 restrictions are currently limiting renovation activity in Melbourne.

It must be noted that CBA’s mortgage book is growing faster than the system, so there’s some market share impact at play. Nevertheless, the bounce recorded by CBA over previous months was reflected in the latest ABS mortgage data.

Thus, it could point to rebounding property demand.

Leith van Onselen
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Comments

  1. New housing lending, or lending for housing. Big difference.

    Besides – every other metric points the opposite way – so this is purely book shuffling and temporary wage stimulus being used to buy houses. RBA, APRA have both stated that JobKeeper can be used to qualify for a housing loan.

    • The Penske FileMEMBER

      This is what I’m seeing and hearing. I know and have heard of more commercial type finance broker reverting to refinancing homes loans at the moment to keep active. The commercial / private space has been dead until really the last week or so, Government can kicking has had a result on “the real world”.

  2. Jumping jack flash

    “The average loan size is higher than a year ago as lower mortgage rates mean that people are able to service a higher level of debt for a given level of income”

    Nice!
    That troubling debt eligibility problem is solved, for now.
    But the real question is whether the debt is growing fast enough to sustain that huge 2 trillion dollar debt pile. I suppose we will see what happens during the next 18 months.

    “Lending for renovations is growing at a solid pace. Many people are undertaking home renovation work…”

    And who said that the renovation bribe didn’t work? Looks like it may have…

    I am also sure that some of this new lending will be to people swapping their 10-20K COVID super withdrawal for a nice fresh, steaming pile of debt. I reckon this will continue into next year. Banks don’t care where your money came from after 6 months of being in your bank account…

    Someone told me the other day they were able to get a hold of 400K from the banks with 25K deposit. Most people should be able to scrape together 5K, and COVID provides the rest. Thanks, COVID, what would we ever have done without you?

  3. Martin North’s data shows Westpac and NAB dumping house mortgages like hotcakes while CBA and ANZ are snapping them up.

    Yet again, the CBA’s “release” is a piece of industry spruik not representative of the truth

  4. Two streets away from me i have seen a block subdivided into 3 parts with the builder advertising a 3×2 on one of the subdivisions only. No construction has begun, it seems they are looking for a buyer off the plan. I have seen the advert online for about 4 months unsold at about 450k. Two weeks ago the ad disappeared and has just other day come back, the exact same advert it is now requesting offers above 632k.