Nobody expects the post-inquisition bounce

Home loans up 

In the event the seemingly endless banking Royal Commission inquisition didn't even end up reporting until the early part of February 2019, after months and months of hearings and investigations. 

The RC was such a maelstrom of woe for banks and brokers that I wouldn't necessarily have expected to see much of a bounce in home lending in February (i.e. 'too soon!).

But, as it happens, there was a a bit of a rebound, with the value of owner-occupier lending up by 3.4 per cent in seasonally adjusted terms.

New South Wales led the way with a bounce of 8.2 per cent in the value of home loans, with Queensland also reporting a bit of a rebound. 

But some historical context is worthwhile here, since lending volumes were well down on a year earlier. 

Lending to investors was up by a more modest 0.9 per cent in February.

It will no doubt take some time before lenders are comfortable with writing marginal business again, with the goalposts being shifted at every turn in recent times.

Within Sydney, auction clearances are well off the lows of last year and median prices of properties sold at auctions have stabilised, but some sub-regions (City & East, Lower North) have been faring considerably better than others (Western Sydney, Central Coast).

Source: Auction Insider

The other factor that's been consistently overlooked in commentary is that lenders are delivering their own interest rate cuts, with mortgage rates for fixed and variable products dropping as low as 3.79 per cent for many products, as noted here last week (and before that).

The below crude measure of 'funding costs' is now at the lowest level since November 2017.

I talked about this in a bit more detail in my recent in-depth negative gearing workshop, where I noted that 3-year fixed rates should now be falling away quite sharply.