Strong Lending Data Shows Positive Signs for the Outlook

10th of August, 2019

After a substantial downtrend in the value of and number of housing loan approvals, yesterdays data showed the situation for the housing market is turning.

The data showed a 5.1% rise in the total value of home loans committed for the month, substantially beating market expectations of 1.5% rise. There were many positive things to note in the release with new loans making up a significant proportion of the uplift ~two-thirds. Additionally, despite the main contributions coming from the dominant Sydney and Melbourne markets, there was positive movement in data series of all states and territories.

It appears that recents rate cuts and a relaxation of the mortgage serviceability requirements are now taking effect in the markets. The hope is that there will be a spillover effect into the wider economy with the purchase of household goods and furnishings.

As with any positive news there are also things within this that the RBA would be closely monitoring. Whilst it is certainly positive to see people out in the real economy making these investment decision, should the rate of assets price growth become unsustainable, especially in the Sydney and Melbourne markets, then the regulators may look to reign in that growth.

Looking ahead, the NAB Business Survey is out later today. On the back of this positive housing data it will be interesting to see if those tones carry over into business sentiment. Also today Curve will be publishing our monthly insights with a deeper look into the risks to the outlook.

Matthew Dunshea

Client Relationship Manager