Pete Wargent blogspot


'Must-read, must-follow, one of the best analysts in Australia' - Stephen Koukoulas, ex-Senior Economics Adviser to Prime Minister Gillard.

'One of Australia's brightest financial minds, must-follow for accurate & in-depth analysis' - David Scutt, Markets & Economics Editor, Sydney Morning Herald.

'I've been investing 40 years & still learn new concepts from Pete; one of the best commentators...and not just a theorist!' - Michael Yardney, Amazon #1 bestseller.

Saturday, 9 December 2017

First homebuyers take the baton

Non-banks up to the plate

The total seasonally adjusted value of housing finance increased by +0.6 per cent to $32.5 billion in October 2017, led by a modest +1.6 per cent increase in investment loans. 

Industry data and polled economists had predicted a weak or very weak month for housing loans in October, but it appears that they failed reckon with the strength in non-bank lending, which has begun to kick in quite hard.

In the event there were 55,406 owner-occupier commitments in the month, above even the expectation of even the most optimistic of forecasters.

That makes it 4 consecutive months with more than 55,000 commitments, showing that home loan demand remains strong.

Of the mainland states, Victoria has by far the strongest homebuyer market.

Average loan sized are creeping up again for non-first homebuyers at $380,300, up from $370,900 a year earlier, but have stalled for first homebuyers as serviceability constraints bite. 

Investment lending ticked up a little in October too, but drilling the trendlines through the figures to smooth out the noise shows that the total value of investor activity is about 6 per cent lower than a year earlier.

Piecing it all together, total housing finance has been pretty robust, coming it at a solid $32.8 billion in trend terms - if there's been any cooling in the market, it may relate as much to muffled overseas investor interest as it does to the domestic market.

Moody's reported that it expects to see only a moderate increase in mortgage delinquencies in 2018, and this appears to be borne out by these figures, with refinancing activity some 11 per cent lower year-on-year.

Financing for new dwellings is tracking at extremely high levels, with the trend result hitting the highest level since Boney M was at number 1 in Australia with Rivers of Babylon in July 1978.

Ye-ah, we wept.

First homebuyer takeover

First homebuyers accounted for 17.6 per cent of finance commitments, up from 17.4 per cent in September, with lending to first homebuyers up by a thumping 38 per cent over the year as government incentives draw in new buyers. 

There has clearly been a sharp increase in first homebuyer activity in New South Wales and to a somewhat lesser extent Queensland.

But it's Victoria that's really driving the way forward, with its 3,250 financing commitments being the highest monthly result since 2009. 

That's upbeat news for turnover in Melbourne, Geelong, and some other regional housing markets in Victoria.

The wrap

Overall, a solid result, in terms of both the volume and value of housing finance written.

So it looks as though 2018 will kick off with the now-familiar "surprisingly resilient" articles.