The Reserve Bank of Australia (RBA) has released aggregate mortgage data for October, with mortgage growth falling to 1.4% over the quarter – the softest result since February 2021:
As illustrated in the next chart, quarterly mortgage growth has fallen sharpest across investors (1.0%), which has fallen to its lowest level since August 2021. By contrast, owner-occupier mortgage growth rebounded slightly in the November quarter:
Annual mortgage growth is now also falling at 7.2% in the year to October 2022:
As above, annual investor mortgage growth (6.2%) is running below owner-occupier mortgage growth (7.7%).
The above data captures the first six interest rate hikes from the Reserve Bank and does not capture the 0.25% increase in November.
Moreover, there is a two to three-month lag between when the official cash rate (OCR) is lifted and its impact on mortgage holders and the economy.
Most economists believe the Reserve Bank will hike the OCR another 0.25% next week, which will be followed by further rate hikes in the new year.
If so, borrowing capacity will shrink, further reducing mortgage demand and placing additional downward pressure on Australian house prices.
