More on the mad mortgage surge

From Westpac:

Housing finance approvals came in well above expectations, the total value of new loans surging 12.6% in August to be up over 30% in three months. With the earlier COVID shock to finance approvals actually quite mild in the scheme of things, the total value of loan approvals is, somewhat remarkably, over 9% above its pre-COVID levels.

A word of warning, disentangling the impact of COVID disruptions and policy responses on various housing indicators is becoming increasingly complex. For finance approvals, the picture is further complicated both by uncertainty around the lags between application and approval.

For the August month, the approvals show no impact whatsoever from Vic’s lockdown, the state instead posting a similar gain to that seen elsewhere. Disruptions are still likely, but will clearly come in September instead.

That said, some other drivers of the strength in August will continue. Reopening rebounds are likely to gather momentum. At the same time, there are clear signs of a material boost from the Federal government’s HomeBuilder scheme, particularly around finance for construction (+22.9%mth), first home buyers (+17.7%mth), and in states where buyers are more likely to qualify and state governments have provided additional support for buyers (e.g. WA +23%mth, Tas +27%mth).

Details:

Owner–occupiers (no.) 10.8%mth, 17%yr

Construction of dwellings (no.) 22.9%mth, 34%yr
Purchase of newly built dwellings (no.) 7%mth, 20.2%yr

Value of loans:
Owner-occupiers ($bn) 13.6%mth, 29.2%yr
Investors ($bn) 9.3%mth, -4.6%yr
Total ($bn) 12.6%mth, 19.3%yr

David Llewellyn-Smith
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Comments

    • happy valleyMEMBER

      And now they can tell every borrower to put in their application that they are earning $1+m pa as the banks are now bound to accept whatever fairy story they are fed.

  1. so Aussies borrowing to their eyeballs right before they are called in the office and told their roles no longer exist due to lack of demand. Will be funny if the boss says – something to do with people not spending enough due to having too large mortgages.

    • They’re not even calling them into the offices now, it’s a phone call! Mate got one yesterday. Wonder if he’ll use the $60K redundancy payout to leverage in?

      These people honestly feel as though nothing can ever go wrong. Led by the MSM who said property values can only crash if unemployment rises…check, or if GDP crashes….check, or if immigration stops…..check. I bet they’re clinging to rate rises being the show stopper now.

    • Jumping jack flash

      “something to do with people not spending enough due to having too large mortgages.”

      This. But it all depends on debt growth rate. If the debt grows fast enough everything will be fine.
      This was proved in 2006. Check the debt growth.

      Problem was we got scared by how well the banks’ system was working and panicked.

  2. happy valleyMEMBER

    Breaking news. What everybody looks forward to on a Friday arvo – Chrissy Joye’s weekly missive on behalf of the RBA, the banks and his self-interest portfolio. And this week’s message is essentially: the banks will outperform. I guess when the banks have been sanctioned to do whatever they like, Chrissy’s tip is in the money big time.

    • Going to be interesting to see how it plays out.

      My intel from a Level 2, Big 4 banker who manages a team of 500 is that this downturn hasn’t even started.

      • my take too.. I think we will start to see first stresses from second half of November. Job loses will start to mount towards end of this month, many people will already hear there will be redundancies in the next few weeks and will stop spending.
        First casualties will be retailers then whatever is left of our manufacturing.
        But the really big wave will start first quarter of 2021.

        • I’m seeing a very large uptick in listings in Victoria in the last few days.

          Also no matter what happens – the rental market, apartment market, AIR BNB market and the commercial CBD market is 100% cactus. There is no getting around that fact – it is toast.

          I would suggest that right there is not just more than enough to collapse the Australian economy – its about 2-3 times more than enough.

          You can buy a CBD apartment in Melbourne out to Carlton and surrounds for around $190k – minimum pre-covid was $300k

          You can buy flats in the Brunswick, Coburg areas for under $300k pre-covd nothing less than $400k

          Mental.

      • happy valleyMEMBER

        He’s probably on the money, but if he says that out too loudly in the banking asylum he’s working in that will be his career limiting move. He needs to drink some of the Kool-Aid that the bank’s board and untouchable level 1 management are gulping down in between their bottles of Cristal quaffing.

      • My mate runs major projects for one of the Big 4 – same deal. Reckons people will be jumping.

        • Ladies leave your man and home
          The club is full of ballers and their pockets full grown
          And all you fellas left with mountains of debt
          It’s a minute to midnight and it’s time to get jumpin’, jumpin’

  3. It does seem to be bonkers. I have been looking to buy in Perth (suburbs in 5km radius of CBD) for a couple of months, and it is an interesting phenomena. First, everyone seems to think that their house is now worth a mint. Second, the houses are moving, as in under offer. Not a lot are sitting unsold. Third, there seems to be virtually no difference in price between houses ~5km from CBD to housed ~10km from CBD (north of the river) – with rare exceptions. Fourth, builders are booked up to 2 years ahead, and vacant land is eyewateringly expensive – have a colleague who bought land just before covid lockdown, and the blocks now have gone up in price by 10%. Also,cost to build has also gone up in price by about the same, so the $25K $20K grants are flowing directly to those intended.

    I did dabble in with an offer, in negotiations, will share outcome when it all settles one way or the other. If I do buy, it may well mark a second peak, so I will lay claim to a share of Gavin’s fame. I do have a similar claim in Florida, if anyone remembers, I described that lovely experience of bubble popping and ~85% loss over a couple of years.

    • When talking to your mortgage broker about how much it is best to borrow, why not let your name guide your decision. (Over here it doubles every few years)

    • Also in Perth and I cannot believe the pace with which properties are moving. Its seriously like the boom is back on. Im at the point of giving up on affordable housing and will probably join the rest of the gang…been waiting too long now and if this wasn’t going to truly burst the bubble nothing will.

  4. No offense but – Australians are idiots. They’re all convinced they’re geniuses, all of them. All countries are fill with idiots, with a thick cream of intelligentsia at the top. Our stupid really does start right at the top though. The left are idiots, the rights are – wow – the centrists are about 0.0001% and the only ones with a brain.

    • Not me, I’m one if the smart ones. I saw that the market was becoming a bubble back in 2006, so I stayed right away!