CBA Mortgage lending consolidates in October

CBA has released its internal mortgage data for October, which shows that mortgage lending consolidated in October, whereas lending for renovations rocketed. Consumer and business lending also remained weak.

Key Points:

  • There was a consolidation in lending for housing in October after several months of very strong growth.
  • But lending for renovations continued to rocket higher in the month.
  • Consumer and business lending remained soft in October.
  • One of the advantages of CBA’s data is that is leads the official ABS lending data.
  • We will watching our data in the coming months for signs of whether the November monetary policy easing has an impact on lending.

CBA data shows lending for housing posted a small fall in October. This isn’t surprising given the huge surge in lending in recent months.

A relatively high share of lending occurred at fixed rates in October. A further reduction in fixed rates relative to variable mortgage rates following the RBA’s latest easing will see the share of fixed rate lending remain high.

The average loan size has broadly tracked sideways in recent months but is higher than a year ago. The latest RBA easing may see another push higher in lending in average loan sizes.

Lending for renovations remained strong again in October and is up more than 40% over the year. With border closures still in play and more time at home people look to be renovating their home.

Consumer lending remains soft, particularly for holidays. Lending for household goods and cars has broadly trended sideways in recent months.

Business lending is also weak. A lift in consumer demand will be the key to stronger non-mining business lending and investment. Very low interest rates are also supportive.


Unconventional Economist