Australia’s mortgage boom is unstoppable!

December’s housing finance data from the Australian Bureau of Statistics (ABS) revealed that mortgage demand has rocketed to unprecedented levels after experiencing 31% growth year-on-year:

CBA’s economics team has released new internal mortgage data showing that the strong momentum continued in January, with new lending for housing soaring to new highs:

New lending for housing continues to grow at a strong pace. Lending growth is a good leading indicator of movements in dwelling prices. We expect dwelling prices to rise by around 14% over the next two years…

The share of fixed rate mortgages remains near all-time highs (circa 40%), reflecting the rock-bottom borrowing rates on offer:

Aussies are also borrowing large for renovations, with lending growing at a very strong pace:

Given CBA is the nation’s biggest bank, we can be confident that its loan book reflects the broader market.

As we know, mortgage growth is the best single short-term indicator for property prices, typically leading prices by about six months:

Thus, the fuse is lit and Australian property prices are set to boom!

Unconventional Economist
Latest posts by Unconventional Economist (see all)


  1. So who are all these people doing new loans? Where have they been & come from, and are they also sellers of property or FHB’s?
    just trying to get my head around all this pent up demand. Are there many more people who are home buyers & if so what were they living in before?
    I guess my query is if the same number of people exist today as they did last year & they were all living somewhere what now happens to the place they were living in before? Especially as now that they are pushing property prices up by so much?
    What happens to the property they were in before & the one the next person was in before?
    I just can’t see why all of a sudden after a great pandemic with so much disruption let alone so much uncertainty we now have the mother of all house price inflation & next to zero increase in the number of people who are in the country!

        • boomengineeringMEMBER

          Its like this, people with no mortgage to their house and money in the bank are disgruntled looking elsewhere. Real estate seems the only option that is tangible and within their comfort zone but has become more expensive than the savings so have to borrow the rest via mortgage.

          • boomengineeringMEMBER

            Also money being cheap incites people to up grade either by moving or renovating. This means the same amount of people and same amount of houses but more mortgages.

          • Then that would mean mortgages are about the same with a very slight uptick – that absolutely, in way shape or form accounts for the data being presented – not on planet earth.

            I understand the idea that people are looking for, and finding rationale, but most of the explanations do not follow through to explain the data we are seeing.

            This level of increase – on a zero net migration – as in ZERO new buyers – can only be explained by a massive increase in buyers in the market – and that massive increase can only be explained by TFF silent purchases – which as I have said previously has been confirmed to me.

      • They are the people who did not qualify for a loan due to the responsible lending obligations which are now history.

        This also means that the government will be buying all these ‘dog sh!t’ loans banks are writing now. Banks would not lend to this group if a deal to on sell to government was not rock solid. (opinion)

    • They are all measured in a phony fiat money called AUD, which has been rapidly depreciating all the time. In fact, it has lost 98% of its value over the last half century.

      House prices in real money – gold – is expensive but not nearly as extreme as those denominated in AUD.

          • Most people who are moving home have lost their jobs in the UK and Europe – very few would give up a well paid job to come home to nothing – absurd proposition.

            We know the numbers, we know the data – it does not explain the explosion – only thing which does is TFF being used to mask the collapse with bank purchases – in fact it matches the data almost to the DOLLAR.

            Not sure why people are having such a problem understanding such a simple and obvious explanation.

      • Frank DrebinMEMBER

        Yes I think this is true, has been an absolute deluge of friends, family and friends of family moving, or looking to move, back to Oz from offshore in my network. Probably a few more to come once the European school calendar finishes mid-year.

        The pandemic and associated nonsense has brought relocation plans forward for a few people, especially those who have lost their jobs. Not sure they will find it any easier in Oz but at least they are close to family.

        The UK lockdown in the middle of winter was the final straw for a few people I know.

          • Frank DrebinMEMBER

            None of the people I know will qualify for the dole, they have far too much cash in the bank after 8-15 years smashing it offshore. A couple don’t need to work, some will start their own business and the rest will chance their hand with the local job market.

            They are also moving home for a variety of reasons including wanting to be closer to ageing parents, bringing up the kids as Aussies, getting them into local high schools for Year 7 etc.

            Covid has brought home to a lot of them being closer to family is more important than their next $500k annual bonus. One of the few good things to come out of all this nonsense for mine….

        • Sooooo – two people. You know “a couple” who do not need to work – the rest will basically chance it.

          Best anecdata I’ve ever heard, really set me straight. Don’t get me wrong – I lived and worked over seas for a decade, along with almost 80% of everyone I know – and not even the high flying bankers and corporate execs would be walking back into Australia if they had a decent job overseas – not one.

          Reckon your mates are talking it up, as mine do – or more likely you only know – “a couple” with enough cash, and its you “talking it up”.

    • FHB’s living with mum and dad saving up a deposit?
      Alternately living in shared accommodation for the same reason.
      That won’t be all of it, but a reasonable chunk.

    • I just read some interesting analysis on another finance website regarding QE and the TFF funds from the RBA – another $100 Billion was just issued to them – its coming through different avenues.

      My view is that the banks are simply buying up any and all failed mortgages using TFF funds – these buyouts come in the form of new mortgages the banks issue to themselves using TFF to take over the failed mortgages. That new bank mortgage is listed as “new credit”, the transfer of the property is listed as a new sale or housing demand and the entire thing is listing as new credit and owner occupier demand since the bank does not rent the house out nor is it an investment property. The failed mortgagees are allowed to stay in the house for limited bank fees to maintain the account and are told a new deal will be struck at when they get back on their feet.

      The banks publicly stated no one would be evicted from their homes if they could not pay their mortgage due to covid – I do not see any other way they could have managed that claim, nor any other reasonable explanation.

      Many here will remember the RBA’s initial response to the pandemic, they considered freezing all home sales to save the market at one point – they certainly told the entire industry they can say and do what ever is required to make sure it does not collapse.

      • They don’t need to buy the mortgage to achieve that, just suspend payments. Either way they still have a liability for interest on the borrowed money so why bother with the shenanigans.

        • No they do have to buy it. You cannot simply suspend without accruing interest on the loan because due to Basel something accord, you will have to declare that as a non performing loan.

        • They can’t just suspend the payments due to regulatory requirements and “bad loans” – this goes to the very core of their “stability” mantra. There are all kinds of laws in place regarding mortgages in arrears and you absolutely can not just indefinitely suspend repayments – no chance.

          As far as interest repayments they are effectively paying this back to themselves and hence the significant of the TFF – this is absolutely happening and have had it confirmed to me by a senior banker at a big 4 while sitting next to his pool in Brighton – not speculative.

          • Mike Herman TroutMEMBER

            Stewart I believe you are on the money. By another name saying something similar previously too… there’s a lot going on here under the surface…

          • The Traveling Wilbur


            Yeah well, if Stewart would actually get off his @ss and clean the pool like he was supposed to, we might be able to see what that was.

      • Interesting. If what you state proves to be true I can understand that it may stop the market from falling. But I get the impression that the market is rising. I suppose that it not impossible in the scenario you present, but it seems less plausible.

        Thanks for the comment in any event.

    • I’ve personally known about 7-8 sets of friends, colleagues who have bought in the past year, all FHBs between 27-30YO. Mix of FOMO and the perceived dip, but also the age people would be looking to buy their own place anyway. MSM hype says up only so no-one is concerned at all…

    • I’ve been renting for 6 years after divorcing in 2014. I’ve been planning on buying a house in 2021 for several years as I want to retire in 2022. I hoped to do it with accumulated cash, but ultimately still needed a small mortgage.

      So my partner and I got a mortgage approval, looked around for a few weeks and then won the auction for what I think is the nicest house in the suburb last weekend. We intend to pay off the mortgage in 4 years.

      So there you go…one tiny part of the pent up demand.

      • My story is almost the same as yours. The number of years is slightly different, but yep that’s what I did as well.
        I’d been looking for almost 2 years for the right opportunity, waiting through the uncertainty of early 2020.
        In Sydney it’s a weird market, relatively few normal basic family homes, so competition for those pushing prices up. But it so much depends where you’re looking and what kind of property

    • I am now one of these people getting a new loan. I’m a FHB and been renting.
      Rent used to be ~$400pw now the going rate is $350. Interest plus cost of ownership now would cost me $250pw, 350pw if I include principle repayments. It is a no brainer for me to buy unless I expect prices to crash considerably (>20%).

      And while some people are currently paying significantly higher prices than what was available 6 months ago or even 2 years ago, for my purchase I am paying a lower price.

  2. Yep that’s a weird one for sure. May have been a lot of young people move home during Covid and saved a shedload of money cos they couldn’t go out. Super withdrawals being put to work? Alot of people buying regional boltholes for insurance?
    You’d have to think there will be a hangover if immigration doesn’t start back up towards the end of the year.
    The other possibility is that the 83B pumped into the business community through jobkeeper has meant parents with businesses are handing out deposits for their kids.

    • I think a lot of it is also the idea that:
      1. It’s cheaper to pay a mortgage than rent
      2. House prices will eternally go up, so get in as soon as you can

      Groups of people I know have mostly been renting, in professional jobs which are more recession proof than others, or could easily transfer skills.

      Not sure about the finances but I would imagine some had $ gifts from parents

  3. pfh007.comMEMBER

    What else was expected?

    This is exactly what the RBA and government wanted and was precisely the point of QE and TFF.

    And to think that some thought it was about making local production more competitive via a lower AUD.

    So many LOLs.

    It’s Friday so no doubt we will hear about another article by a bond trader telling us how everything is fine.

    • ‘This is exactly what the RBA and government wanted and was precisely the point of QE and TFF.

      And to think that some thought it was about making local production more competitive via a lower AUD.

      So many LOLs.’

      One-hundred percent spot on. And still won’t listen. And now articles looking like macrodomain. Such bs.

  4. Hypothetically speaking, is there a way for ordinary people to act to see upward pressure return to interest rates? I saw the pandemic and its lack of immigration as hope for price stability but that didn’t work out. Is there no stopping this madness? I own a home already, my concern is for young Australians.

    • I am with you there. There are winners and losers and it continues to surprise me that we cannot see a little equity between the two.

      On the flip side, the young people I interact with – which is admittedly a small sample size – seem unperturbed about the system as they are simply waiting to get the house when the oldies die.

      • Not too different from the middle age cohort I knock around with. But they need the inheritance to pay their debts, so they technically have the roof over their heads but the sheer magnitude of the debt makes them no more secure than the youngsters renting. Neither of them own jack sh1t and they’re both holding out for the ultimate bailout.

  5. working class hamMEMBER

    New mortgages include ex-pats returning home, people fleeing major centres, people buying the dip, upgraders/downsizers, suburb shifters, interstate moves for covid lockdown reasons, new homes/FHB, the reasons are endless.
    The 31% growth YoY is off the low base of 19′? If the figures are based on loan amounts, are they adjusted for increases in prices, or does it just show the total of all loans recorded?

    • As well as many folk who had money in cash, TDs, Bonds or other assets now earning nothing with their value declining in real terms. Not saying it’s wise or not long term just another place where the funds are coming from.

    • None of this makes sense – there is an opposite and inverse for all of these which cancels them out. The data being shown here is OWNER OCCUPIER not investment properties.

      NET migration data is zero – just as many, if not MORE people left Australia don’t forget – not just expats returning home.

      And people fleeing major centres means those major centres are losing people (which they are – we know the Melbourne data is a massive fall), people buying the dip – more people would have sold due to covid as well, upgraders/downsizers – cancel each other out, suburb shifters – must also sell, interstate moves for covid lockdown reasons – must also sell, new homes/FHB – these are the ONLY net positive source of new buyers – and these are VERY low – we have the data for FHB as well.

      So literally none of this explains the single biggest boom in Australian history when literally we are losing buyers and gaining sellers.

      • Credit requirements-> loosening up eligilbility.
        Super withdrawals, crypto boom -> deposit available to people who otherwise wouldn’t have saved one.
        historically low interest rates the RBA say are here to stay -> DEMAND.

        It’s almost as though the housing market is under supplied and all available money is put into prices driving them higher or something…
        Capacity to pay and all that..chortle.

        • We were being told by Corelogic and this website of a massive boom in 2018 –

          Crypto boom – lols. This is Australia mate – there are less people with crypto in Australia than eskimos with surfboards. Is that a joke ?

          As far as Super Withdrawals go – you are ONLY allowed to access early super withdrawals based on application for hardship which must be approved. Once approved it goes on your credit rating and you can it precludes you from credit availability.

          The Super withdrawals are a massive furphy being spread around by people who I think genuinely know its a lie and re-circulated by the poorly informed.

          More over the ATO is targeting people who have illegally taken early super withdrawals and / or used it for investment.

          Saw some people at the local shopping center spruiking this nonsense the other day and asked them about the problem with the ATO and credit score issues – they said they were financing with non-first tier lenders (high interest rate back door).

          So yeah – nah.

          • “As far as Super Withdrawals go – you are ONLY allowed to access early super withdrawals based on application for hardship which must be approved. Once approved it goes on your credit rating and you can it precludes you from credit availability.
            The Super withdrawals are a massive furphy being spread around by people who I think genuinely know its a lie and re-circulated by the poorly informed.”
            WERE, you seem to have missed the last 12 months. I know people who applied, it got approved, there was no verification other than self assessment.

            “More over the ATO is targeting people who have illegally taken early super withdrawals and / or used it for investment.”
            Sure, just like they targeted foreign property investors after they took over from the FIRB.

          • 32.5% tax bracket got increased from 90 to 120k, that would have helped with serviceability a bit….


            Massive transfer of govt. cash to private savings the last year. Jobkeeper/jobseeker. FHB/homebuilder/stamp duty grants/waviers to pull demand forward. Rates so low folks almost HAVE TO speculate on housing just to generate any yield. Artificially low fixed mortgage rates. Massive levels of fear turned to FOMO. Here we are. Wont go on forever though.

          • Have had the super thing confirmed by a L2 (likely next CEO) at one of the Big 4. This person was telling investor mates to not touch their super as they would be blacklisted immediately. Clearly the bottom feeder lenders don’t mind.

            The L2 was also extremely concerned about post March. Are they buying up loans? I’ll try to find out.

            The data, mixed messaging and basic logic in this ‘boom’ just doesn’t stack up. Hence me scratching my head recently;




          • As far as Super Withdrawals go…Once approved it goes on your credit rating and you can it precludes you from credit availability.

            LOL! It’s happened to absolutley no one I know, including myself. I didn’t need the money, but my circumstance coincided with early release requirements, and I took back into my hands both times. Same for a few people I know similar to me. I have a credit rating (experion I think) of 781 / 800, up from 762 / 800 before covid and early super release. I’ve also received net bank messages for my loan of $x0, 000 dollars is approved, just click the following,… I didn’t even ask for a loan.

            Here’s a sweeping statement, an early super withdrawal may increase your experion credit score, and have the con-man’s wealth bank pre approve an unsolicited loan.

        • jimbo – if you can report back your findings that would be great – my “conversation” was late last year when the TFF was in its early -ish days.

          There was a post on one of todays stories confirming it for ANZ and Westpac.

      • I once knew a man who owned a two million dollar dog.
        How can I say his dog was worth two million dollars, I hear you ask.
        That’s easy. Because he traded it for two one million dollar cats.

      • Frank DrebinMEMBER

        The two biggest nationalities departing are Chinese and India .

        Chinese – probably not selling any property they own, that is their exit strategy from the CCP

        Indians – generally less well heeled and big on the house sharing strategy to get started. Not making a big overall dent in supply when they leave you wouldn’t have thought

      • call me ArtieMEMBER

        Hi Stewart. Half the people here are missing the point of your question Where the hell were all these property buyers living up until now? Where have they emerged from?

        Recall yesterday’s article by Leith pointing out that rental vacancies nationwide are at a low, too. So it’s not as if it’s renters changing to buyers. Furthermore, property for sale listings nationwide are 28% lower than this time last year. I pose the question in inverse form…no properties for sale, no rentals available…where the hell are all the houses??

        I think they are being held by multi property-owning specufestors, either vacant or as AirBnBs. Cashed up boomers (possibly) hoarding property

      • working class hamMEMBER

        It depends, as always on how the term new mortgage is defined.
        To me, a new mortgage is any loan application that is successful, that is not a refinance from the same or different institution.
        Using that definition, all of my original points qualify as new mortgages. With any inverse situations being nullified.

        When real criminal depravity was exposed in the RC with barely an apology, surely banks talking their own book is something that is implied.

  6. reusachtigeMEMBER

    Some sooth sayer was telling us that his tea leaves were screaming destruction by around April last year. Sadly he created “The cult of the Sun”.

    April this year is almost here and the boom is major mega massive in nature. If only someone else had told us this would happen. Someone who is always right. Someone who knows how to maximise profits in housing. And who doesn’t care which way the sun beams hit his perineum just as long as they do.

    • I am in awe of you Reusachtige. A man in a one-eyed pursuit of capital gains. A profit-perfectionist, if not a profit-pervert.
      A man who has shown that no matter how high you drive your assets, another upward thrust is always possible, indeed probable, or certain.

      who doesn’t care which way the sun beams hit his perineum just as long as they do.

      I have long admired you, but now you have finally given me the last piece in the jigsaw of understanding your awesome personality.
      You are a man with an exclusive focus on reward who metaphorically sticks any risk where the sun don’t shine. You can do this because literally in your case there is no where at all!

    • reusachtigeMEMBER

      Migration out of lower achievers and migration back home of higher achievers. Totally makes sense. How no one saw this is what makes you realise how stupid housing bears are. They must be, that’s why they are bears. LOLOLOL.

        • Specufestors drive unit prices.

          Specufestor demand fell off even as the overbuild hit, saturating the market. This latest credit surge has been almost entirely driven by OO’s = detached housing.

          • See below comment; the timelines don’t match up. Unit prices were falling before the migrants dried up.

            Prices not driven by rental yields, but by capital gains (speculation). Hence the importance of negative gearing and CGT discount.

          • Ground floor apartment in pre-2000 solid brick building directly opposite Royal Melbourne Park at the top of the Esplanade – 1 minute from train, 1 minute from shops on Park St – highly sought after.


            Astonishing – that would have been $300k only a few months ago – the market is collapsed in Melbourne – this property has been on the market for months. As have the thousands of others.

        • The increased urban pricing and lifestyle destruction of the same area created by v1brant demand has always been the direct driver of regional and suburban detached housing demand by legacy Australians

          • House prices boom and bust with the rate of change in credit, which is driven by rates and/or lending standards (MP). They don’t boom and bust with changes in migration, which was fairly stable before covid hit.

            Prices go up in major cities due to credit expansion and ripple out toward regional areas, as people with less access to credit are priced out of the major cities.

          • Because there are multiple factors, rents drive serviceability, which drives credit availability, which drives prices.
            Supply is also a factor because it affects rents, and also once the supply exceeds the pool of investors able and/or willing to obtain credit at that level then prices have to fall to attract buyers again.
            It’s never JUST one thing.

          • 99.9% about credit in response to monetary policy. Debt serviceability is largely driven by rates, which is why the housing credit cycle is reignited every time mortgage rates drop; due to the cash rate being lowered, or in this case, due to the banks being offered a blank cheque at 0.25%

            There is nothing that correlates as closely to house prices as the credit cycle, and what the RBA/APRA are doing to ‘manage’ it.

  7. I love how the ABS can churn out real estate data (all believed of course) faster than you can blink an eye…………… meanwhile the less important stuff is ancient history and numberwanged

    • Remember when they scrambled to stop reporting house price falls during the crash last year? With all the crony, backdoor shiz by CL. Now they’re falling over themselves to get the good stuff out to the addicts as quickly as possible.

    • working class hamMEMBER

      This is a really good point. When the whole system is fraudulent and manipulated to create a certain result, it becomes a self fulfilling prophecy.

  8. We just got and appraisal on house in leafy melb eastern suburb 12ks out. Its 5 ro 10 pct less than i think we would have got in 2017. So not seeing a bubble here. The agent said everyone is leaving melbourme.

  9. Marvellous! And the immigration tap should be opened wide by the time this boomy pulse starts to die out, giving new legs to Australia’s never-ending housing boom. Median house price in Sydney to hit $1.5m by the middle of this decade?

  10. I used to think the Sydney RE market was close to reaching peak stupidity, but now I know just how wrong I was.
    We haven’t even warmed up, this is just the appetizer, just something to get us primed for the main event.
    Personally I don’t know what to make of it, in some ways it is reminiscent of the Tech market back in the late 1990’s absolutely stupid prices for companies that didn’t even have a product, there was no cure for that stupidity either, that was until the Techwreck and then suddenly there was no demand for that which had been scorching hot just a few weeks earlier.
    I’ve got a feeling that time it’s different, this time the market won’t turn because the market simply can’t afford to turn, but what does that mean?
    Clearly it’s the final nail in the External Productivity coffin. Sydney simply can’t afford to do anything but service Sydney’s needs, and that’s a worrying concept.
    The only good news is that throughout history many cities have faced this problem before us and for the most part the residents have survived, I guess that’s the underlying bet that everyone is making.

  11. adelaide_economistMEMBER

    Colleague of mine recently bought a new house and just sold their old one. The old house was on the market for two days and had one open before an offer was accepted, with the offer being 12% higher (and unconditional) than the price they thought they would get. They also had multiple other offers (within the first few days) within the ballpark (one was about ten thousand lower and another a couple thousand lower but with more conditions) of the peak offer. This was a detached property in a pretty average in every way suburb of Adelaide. The market, at least for detached properties, is absolutely on fire.

    As a capitulated housing bear, I am only too well aware of the reasons this could be the last boom before the crash we’ve all expected but there’s plenty of reason to expect it could go on for quite some time yet. I’m of the view that if the market keeps pumping up at 5-7% a year for a few years until interest rates go up (if!) and iron ore comes off the boil in a big way, well, even a 20% drop is still more or less just going to leave a buyer where they started. And that’s a recent buyer. The core issue here is timing – and as any good housing bear (or ex housing bear) knows, the market can defy reality for long enough to watch your life more or less disappear while you await the ‘inevitable’.

    We’ve got non-ADI super fund backed lenders lending out super funds for home lending (see Athena et al), the precedent has been established to draw down on super for almost any reason and we have loud voices in politics and media pushing for FHBs (at a minimum) to access their super for a home. It’s also established that ‘inflation’ will be looked through, which you can interpret how you want, but strongly suggests at a minimum any surge in official inflation will be allowed to run hot for at least a few quarters before there’s any response.

    Moreover, I think the RBA’s ability to run endless QE style exercises without causing a crisis (outside of exacerbating the housing crisis) remains fully intact as long as two core criteria are met, those being (1) the rest of the world doesn’t spring back into economic life in a sustained way – so that they too will continue with similar strategies to devalue their currency and (2) if China can’t switch off the demand for Australian commodities in a dramatic way. Australian QE can proceed apace without destroying our ability to import cheaply from a semi-strong $A if these are met. Three to five years for both of these to more or less remain relevant seems pretty feasible at this point.

    At the end of the day, there is no alternative to the asset boosting approach unless we truly believe we are about to move to a new ‘system’ where debt doesn’t play a central role and I just don’t have the ability to suspend my cynicism sufficiently to believe that’s on the (near future) horizon. Long before that ‘new’ system happens we will go through all kinds of policy distortions designed to prolong the current system and delay the inevitable. Sacrificing currency, the value of savings and people’s general wellbeing (in a multitude of ways) will happen before the ‘system’ experiences dramatic change. Obviously ignoring black swan events such as environmental catastrophe or nuclear war.

Leave a reply

You must be logged in to post a comment. Log in now