CBA has released its internal lending data, which points to “further large dwelling price rises ahead”, despite taking a breather in February:
CBA’s data shows new lending for housing took a breather in February after very strong growth in January. New lending has been growing at a strong pace since mid 2020.
The share of fixed rate lending remains near historical highs for both owner-occupiers and investors. Fixed rates are generally lower than variable rates at the moment.
More than half of all fixed rate borrowing is occurring at a 4 year time horizon. Around a quarter is 2 years or less.
Lending for renovations is booming. The Government’s HomeBuilder grant is supporting larger renovations.
New mortgage growth has historically been the best leading indicator for dwelling values, as illustrated in the next chart:
The growth in new mortgage commitments has historically led dwelling price growth.
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Thus, the strong growth witnessed by CBA, which leads the official data released by the Australian Bureau of Statistics, is pointing to further price appreciation for Australian property.
We’ll know that the bull run is fading once mortgage commitment growth begins to fall.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
