In July 2019, housing finance commitment data has shown a sharp rise. The uplift in commitments has matched the turnaround in dwelling values seen since mid-May and has also mirrored the jump in auction clearance rates seen over the same period.

The first chart shows the value of lending monthly split out between owner-occupiers (divided between non first home buyers and first home buyers) and investors (note these figures include refinances). As the chart highlights, each of the three segments have recorded an increase in the value of lending over the past month. In July, there was $17.0 billion in commitments for owner-occupier non-FHB which was 17.2% greater than the previous month and the highest monthly value since November 2018. Owner-occupier FHB commitments were $3.7 billion which was 20.9% higher than the previous month and the greatest monthly value since November 2009. Investor commitments were 7.1% higher over the month and at their highest monthly value since November 2018.

Monthly Value of Housing Finance Commitments - National.PNG

 

The second chart highlights the components of housing finance commitments in NSW. Like the national chart, the data shows a lift in the value of lending over recent months. Owner-occupier lending to non-FHB in July was the highest it has been since November 2018 and was 14.3% higher over the month. Owner-occupier FHB lending was 33.6% higher over the month and the highest since October 2009. Investor lending rose to its highest monthly value since December 2018 and was 4.8% higher over the month.

Monthly Value of Housing Finance Commitments - NSW.PNG

 

Vic has also see the value of lending trend higher in July 2019 with owner-occupier non-FHB commitments and investor commitments recording their highest monthly value since November 2018 while owner-occupier FHB commitments recorded their highest monthly value on record. Compared to the previous month, owner-occupier non-FHB commitments increased in value 17.1%, owner-occupier FHB commitments rose 15.3% and investor commitments rose by 13.3%.

Monthly Value of Housing Finance Commitments - VIC.PNG

 

The chart for Qld housing finance commitments looks somewhat different to NSW and Vic with a large lift in non-FHB owner occupier finance and more moderate rises for FHB and investors. In July 2019, the value of lending to owner-occupier non-FHB was 14.5% higher than the previous month and the highest it has been since November 2018. Owner-occupier FHB commitments rose by 17.2% over the month and were at their highest value since November 2018. Finally, investor commitments increased by 13.1% over the month and were also the highest they have been since November 2018.

Monthly Value of Housing Finance Commitments - QLD.PNG

 

In SA, July 2019 saw the value of lending to owner-occupier non-FHB (+10.4%) and lending to investors (+12.1%) rise however, the value of lending to owner-occupier FHB actually fell, down -0.2% over the month. SA has certainly not seen the lift in lending experienced in other states however, values in Adelaide are continuing to decline. The value of lending to owner-occupier non-FHB in July was the greatest since December 2018, the value of lending to owner-occupier FHB was the lowest since April 2019 and the value of lending to investors was the greatest since October 2018.

Monthly Value of Housing Finance Commitments - SA.PNG

 

WA has experienced an ongoing decline in dwelling values since 2014 which is reflected in the chart however, the value of mortgage lending has increased a little of late. In July, the value of lending to owner-occupier non-FHB rose 14.1% to its highest level in two months. The value of lending to owner-occupier FHB increased 17.4% to its highest value since November 2018. Finally, the value of lending to investors rose to its highest value in two months due to a 14.1% increase over the month.

Monthly Value of Housing Finance Commitments - WA.PNG

 

While lending to non-FHB and investors has lifted over the month in Tas, lending to FHB has continued to fall. In July 2019, the value of lending to owner-occupier non-FHB increased by 27.6% to reach its highest monthly value in two months. Lending to investors rose by 26.6% over the month but was lower than its value in May 2019. Lending to owner-occupier FHB was -14.9% lower over the month and at its lowest monthly value since December 2018. Although lending rose in July there is no sign of a sustainable increase in mortgage demand to-date.

Monthly Value of Housing Finance Commitments - TAS.PNG

 

Demand for mortgages in NT has slumped over recent years as sales volumes have dropped and values have fallen substantially. Despite the slump, recent months are indicating an emerging trend of growing demand from owner-occupier non-FHB and investors. In July 2019, owner-occupier non-FHB lending rose 0.5, owner occupier FHB lending rose 27.1% and investor lending was 2.7% higher. In July 2019, the value of lending to owner-occupier non-FHB was the greatest since November 2018, owner-occupier FHB lending was still lower than the May 2019 figure while investor lending was the largest since December 2018.

Monthly Value of Housing Finance Commitments - NT.PNG

 

There are some early signs of a moderate uplift in mortgage demand in ACT with some substantial increases in July 2019 on the value of lending. Over the month, lending to owner-occupier non-FHB rose by 26.3% however, it was still slightly lower than the value in May 2019. The value of lending to owner-occupier FHB increased by 76.4% over the month to reach its highest value since November 2018. Finally, the value of lending to investors rose 19.5% in July although the value remained lower than the May 2019 figure.

Monthly Value of Housing Finance Commitments - ACT.PNG

It’s early days but there are some clear signs that demand for mortgages is rising, particularly in NSW and Vic. August 2019 saw a big increase in national dwelling values which will likely mean a large lift in lending next month. Moving forward as more stock comes to the market in spring, we would expect the trend towards increasing demand for mortgages to continue.