Lending indicators - is the market coming off the boil?

Key takeaways:

1. Owner Occupier loan commitment slowed in Feb 2021, after a phenomenal surge since late 2020.
2. Investors are on the way back but haven't reached the same level in 2015 and 2017.
3. NSW, QLD and WA are leading the change.
4. APARA is not gonna step in with a macro-prudential hammer unless there is a material change in investor lending volume, although investors' loan commitment is on the way up.

More details, please read my blog: When will the steaming hot property market come off boil?

 

How did prices do in march?

 

Do dead cats bounce?

 

unemployment data, wage growth and real gdp need to be looked as well IMO. The cheap money from banks is fueling a lot of activity

 

but that liquidity can disappear VERY quickly

i would hate to have debt obligations if the lenders start panicking

 

as i see it the regulators are trying to tap on the brakes

that can go very wrong on slippery slopes

 

BC

I think it’s something to watch rather than some thing to call .

the data certainly doesn’t look like an established trend

Have a look at the stock on market stats . I think that suggests somethings

Cliff

 

All of the above charts don't have to continue rising to still drive growth in the short/medium term. For example even if the first chart had total lending plateau off where it is at nearly $30B that would still lead to continual strong growth for a long time.

 

OK. I grabbed the quarterly data from ABS and did a plot on the quarterly % change in Median House price and loan commitments. This is NSW only.

Note: house price here is the median price change in NSW. The loan commitments are seasonally adjusted. They will otherwise be even more choppy. Although loan commitments and house price are not highly correlated in statistics (0.25 correlation), when the loan commitments are in negative territory, the housing market tends to slow down as well based on recent years' data.

The main thing to watch is the investors' lending in the coming months. What will trigger APARA to act? Investors' lending shot up in volume and a big increase in interest-only loans...