The Australian mortgage market crashed in July following three consecutive rate hikes by the Reserve Bank of Australia (RBA).
According to the Australian Bureau of Statistics (ABS), the total value of new mortgage commitments fell a seasonally adjusted 8.5% in July 2022 and was down 11.3% year-on-year:
Owner-occupier and investor mortgage growth tanking.
Owner-occupier commitments fell 7.0% in July, whereas investor commitments fell 11.2%.
The next chart shows divergence across the two categories. Investor mortgage commitments were flat (0% growth) in the year to July, versus a 15.9% fall in annual owner-occupier mortgage commitments:
Annual mortgage growth negative.
FHB mortgages dived 9.5% in July to be down 32.6% year-on-year. FHB’s mortgage share also fell to 14.3% – the lowest reading since 2017:
First home buyer mortgages collapse.
Economists and the market universally anticipate that the RBA will lift the official cash rate (OCR) another 0.5% next week to 2.35%, marking the fifth consecutive rise.
From there opinion is divided. CBA, AMP and NAB believe the OCR will peak at 2.6%, whereas ANZ and Westpac forecast a 3.25% peak in early 2023.
The bond market is even more hawkish, pricing a peak OCR of 3.80% by mid-2023.
Regardless, interest rates are headed significantly higher, which will continue to smash mortgage demand and house prices.
