How the Credit Availability is Impacting the Housing Market

With the federal budget handed down this month, the federal election to be held next month and the likelihood of lower interest rates later this year, there is a lot happening that could affect the housing dynamic.

Another key factor in relation to the housing market will be credit availability. CoreLogic data tracking the number of housing valuation events, which provides a timely proxy for mortgage activity, has remained around 14% below activity from a year ago.

CoreLogic Mortgage Activity Index Australia

A similar trend is confirmed within the less timely ABS housing finance data which continued to show a reduction in both investor and owner occupier lending through to the end of January.

While this trend in weaker housing finance commitments is very entrenched for investment lending, the sharp downturn in owner occupier lending is more concerning. The value of owner occupier lending is around 2.6 times the value of investor lending, so the substantial drop in owner occupier mortgage commitments perhaps explains why the housing downturn is becoming more widespread.