Summary: Home loan approvals increase in number, value in September; “Homebuilder”, first buyer deposit scheme, RBA rate guidance “buoy confidence”; owner-occupier, investor loan commitments up again; loan activity including refinancing “only a smidge below previous record high.
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 reduced its cash rate target in a series of cuts and both the number and value of mortgage approvals began to noticeably increase. Figures from February through to May provided an indication the trend had finished but the last four sets of figures contradict this idea.
September’s housing finance figures have now been released and the total number of loan commitments (excluding refinancing loans) to owner-occupiers leaped by 27.1%. The gain came after a 22.9% jump in August after revisions and, on an annual basis, the rate of growth increased from August’s figure of 34.0% to 69.2%.
“Policy support for housing construction including Homebuilder, the first buyer deposit scheme and forward guidance on rates from the RBA seems to have buoyed confidence for housing from investors and occupiers alike,” said ANZ economist Adelaide Timbrell.
The figures came out on the same day as the latest Westpac-Melbourne Institute Inflation Gauge, ANZ’s October Job Ads survey and the September home approvals report. Commonwealth bond yields moved lower, ignoring higher US Treasury yields at the close of trading on Friday night. By the end of the day, the 3-year ACGB yield had lost 2bps to 0.15%, the 10-year yield had shed 5bps to 0.78% while the 20-year yield finished 4bps lower at 1.40%.
In dollar terms, total loan approvals excluding refinancing increased by 5.9% over the month, down from August’s 12.6% increase after revisions. On a year-on-year basis, total approvals excluding refinancing increased by 25.5%, an acceleration from the previous month’s comparable figure of 19.3%.
The total value of owner-occupier loan commitments excluding refinancing increased by 6.0%, less than August’s revised figure of 13.6%. On an annual basis, owner-occupier loan commitments were 33.8% higher than in September 2019, whereas August’s annual growth figure was 29.2%.