Summary: Value of loan commitments down 8.5% in July; “lending will fall a lot further”; value of owner-occupier loan approvals down 7.7%, investor approvals down 11.2%; number of home loan approvals down 5.8%.
After the RBA reduced its cash rate target in a series of cuts beginning in mid-2019 the number and value of approvals began to noticeably increase, potentially ending the downtrend which had been in place since mid-2017. Figures from February through to May of 2020 provided an indication the downtrend was still intact but subsequent figures then pushed both back to elevated levels in 2021.
July’s housing finance figures have now been released and total loan approvals excluding refinancing decreased by 8.5% In dollar terms over the month, worse than the 3.6% fall which had been generally expected as well as June’s -4.4%. On a year-on-year basis, total approvals excluding refinancing fell by 11.3%, down from the previous month’s comparable figure of -2.0%.
“Total housing lending excluding refinancing is still far above pre-COVID levels and we think lending will fall a lot further,” said ANZ senior economist Adelaide Timbrell.
Commonwealth Government bond yields rose noticeably on the day, largely following the rises of US long-term Treasury yields overnight. By the close of business, the 3-year ACGB yield had gained 8bps to 3.36%, the 10-year yield had added 9bps to 3.70% while the 20-year yield finished 8bps higher at 3.96%.
The total value of owner-occupier loan commitments excluding refinancing fell by 7.0% and follows a 3.3% fall in June. On an annual basis, owner-occupier loan commitments were 15.9% lower than in June 2021, down from -9.6% in June.
The total value of investor commitments excluding refinancing arrangements fell by 11.2%. The drop followed a 6.3% decrease in June, taking the growth rate over the previous 12 months to 0.0%, down from 17.3% in June.
The total number of loan commitments (excluding refinancing loans) to owner-occupiers fell by 5.8% to 29416. The decrease was a larger one than June’s 2.6% fall and the annual contraction rate worsened again, from -19.2% to -21.4%.