Summary: Value of loan commitments up 1.0% in August, in line with expectations; 23.0% higher than August 2023; ANZ: lending strongest in Queensland; ACGB yields rise; rate-cut expectations soften; Westpac: expansion in housing credit significantly more rapid among investors; value of owner-occupier loan approvals up 0.7%; value of investor approvals up 1.4%; number of owner-occupier home loan approvals down 1.0%.
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.
August’s housing finance figures have now been released and total loan approvals excluding refinancing rose by 1.0% In dollar terms over the month, in line with expectations but down from July’s downwardly-revised 3.5% increase. On a year-on-year basis, total approvals excluding refinancing were 23.0% higher than in August 2023, down from July’s comparable figure of 25.0%.
“Across the country, lending is strongest in Queensland, where it is up 41.0% year on year. Investor lending in Queensland is also the strongest in the country, up 58.5% year on year,” said ANZ economist Madeline Dunk.
Commonwealth Government bond yields rose almost uniformly across the curve on the day, largely in line with movements of US Treasury yields on Thursday night. By the close of business, 3-year and 10-year ACGB yields had both gained 7bps to 3.56% and 4.08% while the 20-year yield finished 6bps higher at 4.49%.
Expectations regarding rate cuts in the next twelve months softened, albeit with a February 2025 rate cut still almost fully priced in. Cash futures contracts implied an average of 4.30% in November, 4.225% in December and 4.12% in February 2025. September 2025 contracts implied 3.495%, 94bps less than the current cash rate.
“The rise in financing activity has been broad-based across both owner-occupiers and investors though the expansion in housing credit has been significantly more rapid amongst investors,” said Westpac economist Jameson Coombs. “There was no change to this dynamic in August, with owner-occupier financing activity up 0.7% in the month compared to a 1.4% monthly gain in new investor credit. In annual terms, growth in investor housing finance commitments is running at about double the pace of that of owner-occupiers.”
The total value of owner-occupier loan commitments excluding refinancing increased by 0.7%, down from July’s 2.5% rise. On an annual basis, owner-occupier loan commitments were 16.8% higher than in August 2023, down from July’s comparable figure of 19.8%.
The total value of investor commitments excluding refinancing increased by 1.4%. The rise follows a 5.1% increase in July, taking the growth rate over the previous 12 months from 34.4% to 34.2%.
The total number of loan commitments to owner-occupiers excluding refinancing declined by 1.0% to 26973 on a seasonally adjusted basis, in contrast with July’s 1.9% rise. The annual growth rate slowed from 11.0% after revisions to 6.8%.
