The Australian mortgage market held firm in May, despite the Reserve Bank of Australia (RBA) commencing its rate tightening cycle with its initial 0.25% hike.
According to the Australian Bureau of Statistics (ABS), the total value of new mortgage commitments rose a seasonally adjusted 1.7% in May 2022, but was down 0.4% year-on-year:
Owner-occupier commitments rose 2.1% in May, whereas investor commitments rose 0.9%.
The next chart shows divergence across both categories. Investor mortgage commitments grew by 23.7% in the year to May, versus a 9.7% fall in annual owner-occupier mortgage commitments:
The recent surge in investor mortgage demand continues to crowd-out first home buyers (FHBs). Although FHB mortgages rebounded 3.4% in May they were down 26.5% year-on-year. FHB’s mortgage share has also fallen to 15.4% – well below the pandemic peak – as the investor share has surged:
Given the RBA is tipped to hike interest rates aggressively over the remainder of 2022, expect mortgage demand to stall as buyers wait on the sidelines.
