Australian housing finance falls further in August

Australian housing finance dropped further in August, with new commitments for both owner-occupiers and investors easing. Ongoing credit tightening and out of cycle mortgage rate rises continue to be a drag on the market.

The value of Australia’s housing finance commitments dropped 2.7 percent sequentially and fell 14 percent year-on-year. This is the softest annual result since 2010. Most of the monthly fall was in the owner-occupier segment. These borrowers have been more resilient than investors in the past year, but have now recorded two straight monthly falls, noted ANZ in a research report.

In the owner-occupier results, the value of borrowing from first home buyers dropped sharply, down 3.8 percent sequentially. This signifies that in annual terms, borrowing is flat from one year ago. However, first home buyer activity remains at the highest levels in several years. Initially, this was underpinned by the introduction of stamp duty discounts in New South Wales and Victoria, and more recently the decline in prices has rebounded affordability slightly, although it is evidently still difficult.

With the banks still tightening their lending standards in response to APRA’s macroprudential policies and the Royal Commission, non-bank lenders are attracting a larger market share. Non-bank lenders now account for 8.5 percent of owner-occupier borrowing, which is the second largest share since 2010, stated ANZ.

At 13:00 GMT the FxWirePro's Hourly Strength Index of Australian Dollar was highly bullish at 115.28, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -10.7269. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex