Australian mortgage demand tops out

The Australian mortgage market softened in June, recording its first monthly fall for nine months, according to new data released today by the Australian Bureau of Statistics (ABS).

The total value of new mortgage commitments fell by a seasonally adjusted 1.6% in June 2021 to be up 82.7% year-on-year:

Australian mortgage demand

Australian mortgage demand fell in June.

As shown above, owner-occupiers have driven mortgage demand this cycle, whereas investor demand remains just below its 2015 peak.

That said, investor mortgages are now growing at turbo-charged rates, up 102% year-on-year versus 75.9% growth for owner-occupiers. Both, however, have turned down:

Australian new mortgages

Mortgage growth slowing.

The return of investors continues to crowd-out first home buyers (FHBs). Their share of new mortgage commitments retraced further to 19.7%. That said, FHB demand remains strong overall, up 61.9% year-on-year in June:

First home buyer mortgages

First home buyer mortgages falling.

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

Accordingly, slowing mortgage growth means slower price growth.

Unconventional Economist
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