Narrative shift!
A significant landmark was hit overnight, with US inflation falling by -0.1 per cent in June (after being unchanged in May), taking year-on-year inflation down to 3 per cent (from 3.3 per cent last month).
This was a softer than expected result!
Source: BLS
We have been down here before, one might justifiably say, but crucially core inflation also came in low at only 0.1 per cent, while the annual figure for core inflation fell to just 3.3 per cent.
Annualising the past 3 months points to a very low inflation pulse now for both headline inflation (1.1 per cent) and core inflation (2.1 per cent), the slowest since 2020 and 2021 respectively.
Source: Bureau of Labor Statistics
Inflation is effectively beaten, with the Federal Reserve likely to cut interest rates by September, and more than once by the end of the year.
Back in Australia, the Cordell Construction Cost index showed price increases slowing to a 22-year low of +2.6 per cent.
Source: CoreLogic
Following on from the slowdown in rents, this is obviously great news for inflation in Australia too.
Tim Lawless of CoreLogic explains why:
Source: Tim Lawless, CoreLogic (via LinkedIn)
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Record mortgage size
Australia's largest mortgage aggregator AFG
released its latest quarterly mortgage lodgements index.
It showed the average mortgage size increasing to a new high of $640,600 for the June quarter.
The increase was driven by strong increases over the past year in Western Australia, South Australia, and Queensland.
Investor market share increased from 31 per cent to 32 per cent over the past quarter.
This remains below the historical average of 35 per cent market share for investors, but interest-only lending market share picked up from 19 per cent to 21 per cent, reflecting the increase in investor activity.
Overall, lending settings remain very tight, but lender turnaround times from lodgement to formal approval fell to an average of 16.4 days, which was the fastest since AFG began measuring the metric.
It seems that investors are getting into the market now, which should power the market through to spring.
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