A very clear downtrend was evident in the monthly figures of both the number and value of home loan commitments through late-2017 to mid-2019. Then the RBA began to reduce its cash rate target in a series of cuts and both the number and value of mortgage approvals began to noticeably increase. The latest report has provided figures which indicate that trend is probably over.
February’s housing finance figures have now been released and the total number of loan commitments (excluding refinancing loans) to owner-occupiers fell by 2.0%, a turnaround from January’s revised figure of +1.5%. On an annual basis, the growth rate slowed from January’s revised figure of +3.7% to +1.0%.
ANZ economist Adelaide Timbrell said, “The outlook for housing finance and prices is very different than it was at the start of the year.”
Local Treasury bond yields finished largely unchanged, ignoring modest increases in US Treasury yields in overnight trading. By the end of the day, 3-year and 10-year ACGB yields both finished unchanged at 0.25% and 0.91% respectively while the 20-year yield finished just 1bp higher at 1.61%.
Prices of cash futures contracts were also largely unmoved. By the end of the day, May contracts implied a rate cut down to zero as a 45% chance, down from the previous day’s 48%. June contracts implied a 41% chance of such a move, the same likelihood as the previous day. Another rate reduction was not seen as being any more likely in later months of 2020; December contracts implied a 47% chance of a rate cut down to zero.