Australia: Housing finance approvals pull back - Westpac

After holding relatively steady through most of 2017 and early 2018, Australian housing finance approvals showed a notable pull back in the March month, according to Matthew Hassan, Research Analyst at Westpac.

Key Quotes

“The total number of owner occupier approvals declined 2.2% to be down 3.5%yr – below market expectations of a 1.5% fall but a touch better than industry figures that had pointed to a 3% decline.”

“The real weakness was around the value of investor approvals which dropped 9%mth to be down 16.1%yr. Estimates of investor approvals ex refi are down over 26%yr and just over 30% vs their 2016 peak. That puts the 2017-18 slowdown on a par with that seen in response to the macro-prudential tightening in 2015-16.”

“Combined, the total value of approvals ex refi fell 4.6%mth to be down 6%yr.”

“The detail on owner-occupiers showed a broad based decline.”

“Overall, the March update points to a renewed weakening in demand. More slippage looks likely near term as lenders tighten loan criteria and borrowing capacity assessments – with more stringent assessments also potentially slowing loan processing times. Notably, the average value of owner occupier loans rose in the month and over the year to March, suggesting the softening in approvals to date does not reflect a tightening in borrowing capacity (although this may have been a factor in the investor loan decline).”