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Rate Hikes Impacting Home Loans  But Above Pre-Covid Levels

AUSTRALIA DATA

The lending indicators for September were particularly weak, missing expectations across the board, as substantial rate hikes impact the mortgage market. The value of home loans fell 8.2% m/m after -3.4% in August. But despite recent falls in new loans, they are still above pre-pandemic levels, and so not yet a reason for the RBA to pause.

  • New lending to owner-occupiers fell sharply by 9.3% m/m to be down 19.9% y/y, the lowest annual rate in 12 years. Investor commitments fell 6% m/m and -15.3% y/y. 3-month momentum in home loans is extremely weak in both sectors and deteriorated further in September.
  • But lending remains above pre-Covid levels with loan commitments to owner-occupiers 23.2% and to investors 59.8% above February 2020. The housing boom during Covid is not yet close to being unwound.
  • First home buyers are staying away from the market in the face of rising rates as new loans fell 6.8% m/m to be down 26% y/y. It is also worth noting that first home buyer loans are only 0.7% above the pre-pandemic level of February 2020.
  • New home loan commitments fell across states.
  • The value of personal finance lending was down 5.2% m/m with lending for vehicles and investment especially weak.

Australia Home loan ex refi commitments %

Source: MNI - Market News/ABS


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