Construction loans crash
Housing finance pulled back -2.9 per cent in April, following the surging rebound in March.
The Easter break might have played a role in this, with lending approvals to owner-occupiers dropping back over the month.
Construction finance has also completely crashed, and will continue to be in a diabolical state for as long as tight lending settings are persisted with.
Lending for the purchase and construction of a new home hasn't been this low since the global financial crisis of September 2008, reported the Housing Industry Association:
Source: HIA
The good guys at Westpac economics have saved me the bother of charting these disastrous figures in the neat graphic below:
What a mess.
The Fair Work Commission has announced a 5.75 per cent wage price increase for award wages effective from July 1, which is significant, but below the rate of inflation, with the minimum wage to increase by 8.6 per cent.
The increases will impact 2.75 million workers out of around 14 million employed, btu won't be enough to move the wage price index much further from the current level of only 3.66 per cent.
Nevertheless the strong increase has led to market economists looking for one more interest rate increase in this cycle, although equally market pricing further out still sees interest rates dropping in 2024.
Source: ASX
Bill Evans of Westpac wrote that the RBA will hold interest rates next week, with the outlook for household spending tanking, and an extended pause needed to take into account the significant lags built in to this cycle.
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Reflecting of the above, Westpac cut its 2-year fixed rate mortgage offering for owner-occupiers this week:
Source: Westpac (via Eric Wu, broker)
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GDP growth for Q1 is expected to be flat or mildly positive next week, at just 0.2 per cent.
Were it not for gargantuan population growth the figure would obviously be negative!
