Since late 2017/early 2018, a very clear downtrend has been evident in the monthly figures of both the number and value of home loan commitments. This downtrend lasted through to June 2019 when the RBA cut its cash rate target from 1.50% to 1.25%. The RBA then reduced its target again in July; coincidentally or otherwise, approvals figures jumped.
August’s housing finance commitment figures have now been released and the total number of loan commitments to owner-occupiers increased by 1.8%, less than the expected 2.5% increase and less than July’s revised figure of +5.5%. On an annual basis, the growth rate improved for a second consecutive month from July’s revised figure of -7.6% to -3.7%. When “re-financings” are removed, the number of loan commitments increased by 0.7% over the month but they contracted by 5.1% when compared to August 2018’s figure.
ANZ economist Adelaide Timbrell said, “The effects of June/July rate cuts and APRA changes have continued to flow through to housing finance. Investor lending drove this result, growing [by] 5.7% in August, the strongest result since September 2016.”
Despite increases in US bond yields overnight, Australian bond yields hardly changed. By the end of the day, the yield on 3-year ACGBs remained unchanged at 0.57%, while 10-year and 20-year yields had both crept up 1bp to 0.89% and 1.31% respectively.