The Reserve Bank of Australia (RBA) released aggregate mortgage data for August, with mortgage growth tanking to 1.6% over the August quarter – the weakest result since April 2021:
Mortgage growth tanks in response to rate hikes.
As illustrated in the next chart, mortgage growth has tanked across both owner-occupiers (1.7%) and investors (1.5%):
Investor and owner-occupier mortgage demand tanking.
Annual mortgage growth is also now falling at 7.6% in the year to August 2022:
Annual mortgage growth also turning down.
The above data only captures the first four interest rate hikes from the RBA and does not capture the 0.5% increase in September.
Moreover, there is typically a two to three-month lag between when interest rates are lifted and their impact on mortgage holders and the economy.
Most economists and the bond market believe the RBA will lift the official cash rate another 0.5% next week, which will be followed by further rate hikes over coming months.
If so, borrowing capacity will be further reduced and mortgage demand will shrink, putting further downward pressure on Aussie house prices.
