The Australian Bureau of Statistics has just released its Housing Finance Data for December which put the total value of dwelling commitments (excluding alterations and additions) up 1.8% in trend terms and up 0.2% in seasonally adjusted terms.
Normally we’d focus on the seasonally adjusted number but this strong rise in the trend proves that the RBA’s low rates policy is starting to really gain traction – at least with investors. This sector of the market saw a trend increase of 3% against the owner-occupier rise of a still strong 1%.
Matthew Hassen, an economist at Westpac noted in a report to clients after the data was released that “the value of investor lending posted another strong rise in Dec, up 2.9%mth to finish up 40.7%yr”
That is a big rise and has contributed to first home owners being squeezed out of the market over hte past year but they made a comeback in December with their share of loans up to 12.7% from November’s all time low of just 12.3% of all loans. Of concern however is that first home owners are doing this by increasing the size of the loans they are borrowing with the ABS reporting:
“The average loan size for first home buyers rose $6,400 to $305,000. The average loan size for all owner occupied housing commitments rose $2,000 to $322,100 for the same period.”
While the value of loans was up, the ABS found that the total number of home loans issued to owner-occupiers in December down a seasonally adjusted 1.9%, under market expectations of a 0.9% gain. The number of owner-occupier home loans rose a total of 5.9% in the previous three months.
The RBA will be watching for signs of increased risk in the market and bigger loans are a sign of leverage.
The Aussie dollar rose about half a cent as a result of this data as it reduces the likelihood of an RBA cut to almost zero in the next 6 months.
There’s more on the ABS.