Finance Approvals

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GUEST OBSERVER
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Australian housing finance approvals to owner occupiers edged up 0.5% in June, undershooting market expectations of a 1.5% gain. The total number of approvals is down 4%yr.
The picture was ex-refinancing was more in line with expectations with a 1.9% gain to be up 3.4%yr.
Note that the macro prudential tightening measures introduced in late March and associated increases in increase rates for investor and 'interest only' loans have likely given indirect support to owner occupier loan activity.
That said, the value of investor loans was stronger than expected, posting a 1.6% gain to be up 5.7%yr. The total value of loans was up 0.8%mth – ex refi up 1.5%mth, 7.1%yr.
Note that a second round of mortgage rate increases for 'interest only' loans came through late in the month and is likely to impact in coming months.
The state detail is of limited use as investor loans are not split out in this release.
However a notable point in the loan type detail is the continued surge in construction-related finance approvals – finance for construction up 3.6%mth and finance for the purchase of newly built dwellings (which includes for settlement of ‘off the plan’ apartment purchases) up 3.5%mth. The former suggests non high rise construction is likely to lift while the latter is likely related to the wave of high rise apartment completions.
Overall, the numbers will be disappointing for regulators looking for a more material slowing in investor activity although the full impact of macroprudential measures has yet to come through.
Details Owner–occupiers (no.) 0.5%mth, –4%yr
– ex-financing (no.) 1.9%mth, 3.4%yr
Construction of dwellings (no.) 3.6%mth, 8.9%yr
Purchase of newly built dwellings (no.) 3.5%mth, 10.2%yr
Value of loans:
Owner-occupiers ($bn) 0.3%mth, 1.2%yr
Investors ($bn) 1.6%mth, 5.7%yr
Total ($bn) 0.8%mth, 2.9%yr
Total ex refi ($bn) 1.5%mth, 7.1%yr
 
Matthew Hassan is senior economist with <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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