Since late 2017/early 2018, a very clear downtrend has been evident in the monthly figures of both the number and value of home loans commitments. The latest numbers have not done anything to alter this picture.
The ABS has released December housing finance commitment figures* and they were lower than expected. The total number of loan commitments to owner-occupiers fell by 6.1%, less than the expected 2% contraction and lower than November’s figure of -0.90%. On an annual basis, the growth rate deteriorated further to -11.6% after registering -7.2% in November. When “re-financings” are removed, the number of loan commitments fell by 8.2% over the month and by 14.4% when compared to commitments from December 2017.
ANZ economist Jack Chambers said, “The decline in housing finance accelerated in December, with the largest falls seen for owner-occupiers. Finance for first home buyers, which had previously outperformed other segments, fell sharply in December. Total financing is down 20% over the last year and further falls are likely in the near term.”
The report came out on the same day as NAB’s January business survey, so the individual effect of this report is hard to judge. By the close of trade, the yield on 3-year ACGBs had gained 4bps to 1.65% while 10-year and 20-year yields had each increased by 5bps to 2.11% and 2.49% respectively. In the cash futures market, the reaction was modest and contract prices moved in a direction which indicates a lower likelihood of a rate cut later this year or in the first half of 2020.
