Mortgage applications slump

John Kavanagh
Measures of demand for housing finance are somewhat inconsistent at present. Monthly data from the Australian Bureau of Statistics shows a mild improvement over the month of September, while an alternative measure from a private credit bureau shows a slackening in demand over the September quarter.

The ABS said the value of new housing commitments (for owner occupiers and investors) increased by 1.0 per cent in September, on a seasonally adjusted basis. Owner-occupier loans rose by 0.6 per cent while investment loans rose by 1.7 per cent.

On a trend basis demand was flat in September, as it has been for the last six months.

The greatest growth is for loans for newly built homes followed by refinancing of existing homes.

By category of lender there is a mild increase in proportion of mortgages sourced by building societies over the last six months, providing some evidence that consumers are looking beyond banks for other suppliers of home loans. On the other hand credit unions are not sharing as strongly in this shift in demand.20101111_housing_finance_tab

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Veda Advantage, a credit bureau, said that based on lender use of their credit files, consumer applications for mortgages in the September quarter were down 23.8 per cent on the same period last year.

Veda Advantage head of consumer risk, Angus Luffman, said demand for mortgages was back at levels last seen during the financial crisis.

Luffman said: "This record decline continues to be measured against the impact of the government stimulus package for first home buyers, which inflated demand growth last year."

According to Veda, the biggest fall in mortgage applications was in Queensland (down 32.4 per cent). Victoria, where applications were down 17.4 per cent, held up best.

Personal loan applications in the September quarter were down 2.2 per cent on the same period last year. It was the 12th consecutive quarterly decline in personal loan applications.

Demand for credit cards went against the trend. Applications were up 3.6 per cent year on year - the first quarterly increase in demand since March 2008.