‘Strong trend’: Equifax mortgage data signals market correction Link
Fresh figures from credit giant Equifax show that every state and territory in Australia is experiencing a contraction in mortgage applications, indicating a house price correction could be around the corner.
The latest Quarterly Consumer Credit Demand Index by Equifax, released today, shows that mortgage demand has fallen significantly over the last quarter of the 2017 financial year.
The trend over the last six quarters shows a strong but short-lived pick-up in mortgage applications over the December quarter (6.7 per cent) before falling to 4.5 per cent over the March quarter.
Mortgage applications have now eased in all jurisdictions during the June quarter, including in NSW and Victoria where housing markets have been the strongest. Overall mortgage applications fell at an annual rate of 0.9 per cent in three months to 30 June.
“It came off a year or so ago and then it had a bounce and has started to come off the last two quarters again,” Equifax senior GM consumer product, Angus Luffman, said. “Anyone with a mortgage knows that different regions and different postcodes move at different speeds at different times,” Mr Luffman said. “What’s interesting here is that the trend of slowing growth or decline is common right across the country. Every state is at a slower growth rate or in a bigger decline than it was last quarter. That is compelling. The trend is in one direction.”
Mr Luffman highlighted that the trend in mortgage applications is a lead indicator of housing turnover and therefore house prices by two to three quarters.
“This is a particularly strong trend,” he said. “Any debate about whether the housing market is softening should now be put to rest, as we can clearly see that, even in the historically strong geographies on the Eastern seaboard, mortgage application demand is slowing or already in decline.”
The figures come just days after Deloitte Access Economics flagged “storm clouds on the horizon” for Australia’s best performing housing markets.
The group’s top forecaster and leading economist Chris Richardson warned that “today’s heroes – NSW and Victoria – have clay feet”, highlighting that a house price boom borrows growth from the future.
“Both NSW and Victoria will have to pay back some of that in the years ahead as today’s housing prices gradually reconnect with reality,” he said.
“Luck’s a fortune, and NSW has it in spades amid the shift to lower interest and exchange rates since 2012. But storm clouds are building, as the housing price boom has artificially supported retail and home building. There’ll be an eventual butcher’s bill to pay as those supports reverse.”
Meanwhile, Equifax data shows the struggling real estate markets in the Northern Territory (NT), Western Australian (WA) and to a lesser degree South Australia (SA) all saw a significant fall in mortgage applications over the latest quarter.
NT mortgage applications plunged 17.5 per cent (from -8.8 per cent in March), SA contracted 4.6 per cent and WA mortgage applications fell heavily by 18.5 per cent (from -12 per cent three months earlier).
For those of you who don't know Equifax is the new name for Veda, the major credit reporting agency in Australia. Every time someone makes a formal loan application there is a notation made on their credit file. The volumes alone give us some indication of the strength of the housing market. Less people borrowing means less people buying. It's not a perfect guide, but it's always worth reading this report.
It could be that people have wised up and stopped phoning every lender on the internet, but probably not.
Take risks - if you win you will become wealthy, if you lose you will become wise
This mornings t.v news they were talking about the RBA possibly raising rates buy 2% maybe early next year as Glenn Stevens always said he wanted the AUD down lower not up high as it has been lately?
This mornings t.v news they were talking about the RBA possibly raising rates buy 2% maybe early next year as Glenn Stevens always said he wanted the AUD down lower not up high as it has been lately?
If rates go up wages will have to follow also.
Why does there have to be a wage increase if rates go up?
There want a wage increase when house prices go up.
WHAT WOULD EDDIE DO? MAAAATE! Share a cot with Milton?
This mornings t.v news they were talking about the RBA possibly raising rates buy 2% maybe early next year as Glenn Stevens always said he wanted the AUD down lower not up high as it has been lately?
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