Summary: Value of loan commitments down 0.3% in September, in contrast with expected rise; 18.9% higher than September 2023; ANZ: first fall in investor lending in five months; ACGB yields rise; rate-cut expectations largely unchanged; Westpac: result centred on decline in value of loans to investors; value of owner-occupier loan approvals up 0.1%; value of investor approvals down 1.0%; number of owner-occupier home loan approvals down 0.1%.
The number and value of home-loan approvals began to noticeably increase after the RBA reduced its cash rate target in a series of cuts beginning in mid-2019, 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 record highs in 2021. After a considerable pullback in 2022 both the value and number of approved loans resumed rising in 2023.
September’s housing finance figures have now been released and total loan approvals excluding refinancing declined by 0.3% In dollar terms over the month, in contrast with the 1.0% rise which had been generally expected and August’s upwardly-revised 2.1% increase. On a year-on-year basis, total approvals excluding refinancing were 18.9% higher than in September 2023, down from August’s comparable figure of 22.9%.
“This was the first fall in investor lending in five months,” said ANZ economist Madeline Dunk. “Victoria, Queensland, Western Australia and the ACT all recorded declines. Average loan sizes for investors increased, suggesting the fall was due to softer sales volumes.”
Commonwealth Government bond yields rose moderately along the curve on the day. By the close of business, 3-year and 10-year ACGB yields had both gained 3bps to 4.04% and 4.55% respectively while the 20-year yield finished 4bps higher at 4.89%.
Expectations regarding rate cuts in the next twelve months remained largely unchanged, with a February 2025 rate cut not viewed as especially likely. Cash futures contracts implied an average of 4.33% in November, 4.31% in December and 4.26% in February 2025. September 2025 contracts implied 3.94%, 40bps less than the current cash rate.
“The soft September result centred on a 1% decline in the value of loans to investors,” said Westpac senior economist Matthew Hassan. “Despite this, growth has been considerably strong across this segment, up 29.5% in value terms and 20.8% in loan numbers, both near historical highs.”
The total value of owner-occupier loan commitments excluding refinancing increased by 0.1%, down from August’s 2.4% rise. On an annual basis, owner-occupier loan commitments were 13.1% higher than in September 2023, down from August’s comparable figure of 16.7%.
The total value of investor commitments excluding refinancing decreased by 1.0%, in contrast with a 1.8% increase in August. The annual growth rate from 34.4% to 29.5%.
The total number of loan commitments to owner-occupiers excluding refinancing slipped by 0.1% to 26841 on a seasonally adjusted basis, a smaller decline with August’s 0.3% fall. The annual growth rate slowed from 6.1% after revisions to 4.1%.
