Mortgage commitments plunge after negative gearing and CGT changes

Data from the AFG group of mortgage brokers, presented below by Justin Fabo from Antipodean Macro, shows that the number of mortgage commitments issued in the June quarter fell sharply, presumably reflecting the changes to negative gearing and capital gains tax (CGT) announced in the federal budget in early May.

As illustrated above by Fabo, the AFG series tends to track the official Australian Bureau of Statistics (ABS) series closely, suggesting the ABS will also record a significant fall when it releases its lending indicators for the June quarter on 14 August.

The sharp decline in mortgage commitments recorded by AFG has been reflected in the nation’s auction market, which has recorded seven consecutive weeks of final auction clearance rates below 50%, with this week’s figures likely to be the eighth consecutive week below 50% when they are released on Thursday.