Australian mortgage demand cools

The Australian mortgage market fell in August amid lockdowns, 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 4.3% in August 2021 to be up 47.4% year-on-year:

New mortgages

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 92.2% year-on-year versus 33.5% growth for owner-occupiers. Both, however, have turned down:

New mortgage growth

The return of investors continues to crowd-out first home buyers (FHBs). FHB mortgages fell 4.9% in August with their share of new mortgage commitments retracing further to 18.1%. That said, FHB demand remains strong overall, up 11.2% year-on-year in August:

FHB mortgages

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

Accordingly, slowing mortgage growth should mean slower price growth.

Unconventional Economist

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