The release of housing finance and consumer confidence figures yesterday warmed us up nicely for yesterday’s speech from Reserve Bank Governor, Glenn Stevens.
With him advancing the proposition that it could be time for households to put a hold on debt, and wondering if that’s what we are indeed now seeing happening, the April housing finance figures revealed another very cautious month for homebuyers with housing finance commitments for owner-occupied housing falling for a seventh consecutive month and hitting a 9 year low.
And consumer confidence in June fell for a second month.
New housing loans fell 1.8% in April, seasonally adjusted, to 47,669, the Australian Bureau of Statistics said yesterday.
The market had been forecasting a 2% fall in the number of owner-occupied housing finance commitments for April.
It was the lowest number of new loans for owner-occupiers since March 2001.
The total value of housing finance fell 0.8% in April, seasonally adjusted, to $21.7 billion.
The value of home loans for owner-occupied homes rose 0.6$ to $13.707 billion, after seasonal adjustments.
And the value of loans for investment homes rose 1.3% to $7.993 billion.
The number of commitments to buy new homes rose 6.3% after seasonal adjustments, while commitments to buy established homes fell 1.8%.
The number of loan commitments for building homes fell 4.8%.
The ABS said there was a 2.5% fall in the seasonally adjusted number of owner-occupied dwellings financed by banks, while the seasonally adjusted number of owner-occupied dwellings financed by non-banks rose 3.6% and the seasonally adjusted number of commitments for owner-occupied dwellings financed by permanent building societies rose 7.8% in April.
While the fall can be blamed on higher interest rates, building societies and non-bank lenders charge market rates for mortgages, so the explanation that it was just the higher rates from the RBA, is not wholly the answer.
Banks were certainly impacted and perhaps you can argue that customers are turning away from them because of stricter lending requirements (but those are also in force in non-bank lenders and building societies).
But overall there is a very cautious note now among home buyers, actual and prospective.
The number of new home loans is down 26% from June last year.
That’s a lot of caution.
And caution was the key word from the latest Westpac/Melbourne Institute survey of consumer confidence, released yesterday.
Consumer confidence fell again, following business confidence lower to levels not seen for a year or more.
In fact combined with May’s fall and June’s drop, consumer confidence had its biggest back-to-back monthly falls in more than two years.
For that we can blame the problems offshore that hit the stock market lower, falling commodity prices and the noisy mining tax debate.
The index dropped by 5.7% in June to 101.9 from 108 in May as Australians took a more pessimistic view of the economy.
Combined with May’s 7% fall, June’s slide notched the biggest two-month drop since March 2008, when Bear Stearns collapsed as the global financial crisis worsened.
The survey showed that consumers’ views of the economy dimmed, with the view of current conditions and expectations slumping in the month.
Four out of five components of the index fell, with a 17.7% drop registered in the gauge of family finances compared with a year ago.
The current conditions index dropped 8.7%, while the expectations index fell 3.5% in June.
