Mortgage issuance smashed all records in March

The Australian mortgage market remained white hot in March, hitting new all-time highs according to new data released today by the Australian Bureau of Statistics (ABS).

The total value of new mortgage commitments rose by a seasonally adjusted 5.5% in March 2021 to be up 55.3% year-on-year:

Mortgage commitments

New mortgage commitments hit another record high in March 2021.

As shown above, the record increase in new mortgage commitments has been driven by owner-occupiers, whereas investor demand remains well below its 2015 and 2017 peaks.

That said, both components are now growing at turbo-charged rates, with owner-occupied commitments up 55.6% year-on-year in March and investor mortgage commitments up 54.3%:

New mortgage growth

Annual growth in both owner-occupied and investor mortgages is running at historical highs.

The return of investors is beginning to crowd-out first home buyers (FHBs). Their share of new mortgage commitments retraced further to 22.6%, whereas the value of FHB commitments has also fallen for two consecutive months. That said, FHB demand remains strong overall, up 61.4% year-on-year in March:

First home buyer mortgages

First home buyer demand remains strong but is fading.

The strong growth in new mortgage commitments is the key reason why Australian property prices are growing so rapidly.

Tomorrow I will compare mortgage growth to price growth across the major capital city markets.

Unconventional Economist

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