Australian mortgage originations collapsed in September following five consecutive interest rate increases from the Reserve Bank of Australia (RBA).
According to the Australian Bureau of Statistics (ABS), the total value of new mortgage commitments fell a seasonally adjusted 8.2% in September 2022 to be down 18.5% year-on-year:
Owner-occupier commitments plunged 9.3% in September, whereas investor commitments fell 6.0%.
The next chart shows the broad-based falls across the two categories. Owner-occupier mortgage commitments plummeted 19.9% in the year to September, with investor mortgage commitments also plunging 15.3% year-on-year:
The above data obviously misses October’s and yesterday’s consecutive 0.25% rate hikes.
The slump in mortgage originations is the key reason why Australian dwelling values have fallen sharply, led by Sydney:
Rising interest rates reduces borrowing capacity, which then flows through to lower house prices.
Given the RBA is expected to increase rates again by 0.25% in December, with further rises likely in the new year, both mortgage demand and house prices will continue to fall.
