Australian mortgage commitments fell further in October following six consecutive interest rate hikes from the Reserve Bank of Australia (RBA).
The Australian Bureau of Statistics (ABS) reported that the total value of new mortgage commitments fell a seasonally adjusted 2.7% in October 2022 to be down 17.1% year-on-year:
Owner-occupier mortgage commitments fell 2.9% in October, whereas investor commitments were down 2.2%.
The next chart shows the decline across both categories. Owner-occupier mortgage commitments were down 17.2% in the year to October, whereas investor mortgage commitments were down 17.0% year-on-year:
The above data misses November’s 0.25% rate increase, which is expected to be followed up with another 0.25% hike next week.
The slump in mortgage commitments is the primary reason why Australian dwelling values have fallen sharply, led by Sydney:
Higher interest rates mean less borrowing capacity, smaller mortgage commitments, and lower house prices.
Given the RBA is widely expected to increase rates again by 0.25% on Tuesday, with possible further hikes in the new year, both mortgage demand and house prices will continue to decline.
