Summary: Value of loan commitments up 4.9% in March; 26.3 lower than March 2022; Westpac: evidence of clear stabilisation in housing markets; value of owner-occupier loan approvals up 5.5%; investor approvals up 3.7%; number of home loan approvals up 6.5%.
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.
March’s housing finance figures have now been released and total loan approvals excluding refinancing increased by 4.9% In dollar terms over the month, in contrast with the 0.2% decline which had been generally expected as well as February’s -1.0%. On a year-on-year basis, total approvals excluding refinancing fell by 26.3%, up from the previous month’s comparable figure of -30.8%.
“Overall, new finance approvals add to the evidence of a clear stabilisation in housing markets, the latest gain consistent with a clear lift in the total value of sales over the last 3 months, coming off both firmer prices and turnover volumes,” said Westpac senior economist Matthew Hassan.
Commonwealth Government bond yields slipped at the short end while longer-term yield rose modestly. By the close of business, the 3-year ACGB yield had lost 2bps to 2.94% while 10-year and 20-year yields both finished 1bp higher at 3.32% and 3.80% respectively.
In the cash futures market, expectations regarding rate cuts in 2024 firmed. At the end of the day, contracts implied the cash rate would remain essentially steady at the current rate of 3.82% to average 3.83% in June and 3.85% in July. February 2024 contracts implied a 3.54% average cash rate while May 2024 contracts implied 3.35%.
The total value of owner-occupier loan commitments excluding refinancing increased by 5.5%, a turnaround from February’s -1.2%. On an annual basis, owner-occupier loan commitments were 24.8% lower than in March 2022, above February’s comparable figure of -29.9%.
The total value of investor commitments excluding refinancing arrangements rose by 3.7%. The rise followed a 0.6% decline in February, slowing the contraction rate over the previous 12 months from 32.5% after revisions to 29.2%.
The total number of loan commitments to owner-occupiers excluding refinancing increased by 6.5% to 24,888 on a seasonally adjusted basis. The rise contrasted with February’s 2.0% decline and the annual contraction rate slowed from 28.8% to 22.4%.
