Summary: Value of loan commitments down 2.9% in April; 24.3% lower than April 2022; Westpac: disruptions from Easter period; value of owner-occupier loan approvals down 3.8%; investor approvals down 0.9%; number of 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 elevated levels in 2021. However, there has been a considerable pullback since then.
April’s housing finance figures have now been released and total loan approvals excluding refinancing decreased by 2.9% In dollar terms over the month, in contrast with the 2.0% increase which had been generally expected as well as March’s 5.0% rise. On a year-on-year basis, total approvals excluding refinancing fell by 24.3%, up from the previous month’s comparable figure of -24.6%.
“Overall, the update is hard to assess given likely disruptions from the Easter holiday period,” said Westpac senior economist Matthew Hassan. “At the margin, it’s a little more consistent with the view that markets are stabilising rather than lifting but we will clearly need the May update to clarify the situation.”
Commonwealth Government bond yields increased on the day. By the close of business, the 3-year ACGB yield had gained 5bps to 3.43%, the 10-year yield had added 3bps to 3.65% while the 20-year yield finished 2bps higher at 4.04%.
In the cash futures market, expectations regarding rate cuts in 2024 have been deferred until the second half of the year. At the end of the day, contracts implied the cash rate would rise from the current rate of 3.82% to average 3.925% in June and then to 4.045% in July. February 2024 contracts implied a 4.015% average cash rate while May 2024 contracts implied 3.87%, 5bps more than the current rate.
The total value of owner-occupier loan commitments excluding refinancing decreased by 3.8%, a turnaround from March’s 6.3% rise. On an annual basis, owner-occupier loan commitments were 24.3% lower than in April 2022, slightly above March’s comparable figure of -24.6%.
The total value of investor commitments excluding refinancing arrangements declined by 0.9%. The fall followed a 3.4% rise in March, slowing the contraction rate over the previous 12 months from 29.3% after revisions to 28.6%.
The total number of loan commitments to owner-occupiers excluding refinancing slipped by 0.1% to 24,847 on a seasonally adjusted basis. The fall contrasted with March’s 6.3% rise and the annual contraction rate slowed from 22.5% to 20.3%.
