Mining states lead rebound in demand for owner-occupier mortgages in March: ABS

Some signs of life returned to the mortgage market in March, with owner-occupier mortgage commitments rising 0.3% on a seasonally adjusted basis over the month, according to the latest ABS estimates. 

The value of investment housing commitments seasonally adjusted fell 1.0% in March 2012 while the total value of dwelling commitments excluding alterations and additions falling  0.5% on a seasonally adjusted basis in March to $20.18 billion.

The strongest gains were made in the resource-rich states, with owner-occupier mortgage commitments up 3.5% ($232 million) in Western Australia and 2% ($176 million) in Queensland. 

The Northern Territory was the standout among the smaller markets with a 23% ($73 million) increase. 

NSW remained flat with just a 0.1% increase in mortgage lending while there were falls recorded in Victoria (down 79, 0.6%), Tasmania (down 37, 4.5%), the ACT (down 22, 2.6%), and South Australia (down 14, 0.4%).

Mortgage broker Loan Market calculated that national results for the March 2012 quarter were 10% up on the corresponding quarter in 2011 with all states and territories on the mainland on the rise. Only Tasmania bucked the trend.

Western Australia and Queensland had March quarter increases of 25% and 16%  respectively, while the Northern Territory was up 18% and NSW 11%. There was a 4% increase in South Australia, 3% in the ACT and 2% in Victoria. Tasmania had an 8% decrease.

Loan Market corporate spokesperson Paul Smith says the latest figures are "highly encouraging". 

“We are obviously seeing more confidence from consumers so far this year, compared to last, which augers well for the months ahead.”

Smith says this month’s lowering of official interest rates from 4.25% to 3.75% would also have an impact on the home finance market in the coming months.

“With two consecutive months of flat activity, we should see the figures for May and June spike in reaction to the RBA’s rate cut,” he says.

”Even though most lenders held back on passing on the full 50 basis points, they still lowered their variable rates by significant margins in a positive move for home loan customers.

The Housing Industry Association (HIA) noted that the number of loans for the construction or purchase of new homes lifted by 3.5% in March,  "a welcome piece of good news given the existing weak conditions facing the new home building sector", according to HIA senior economist, Andrew Harvey.

“The March figures reflect a period prior to the 50 basis point cut in interest rates which occurred in May, and although the cut was only partiallly passed on by Australia’s banks, this factor should act to spur a further modest improvement in new home lending in the coming months,” Harvey says.

New South Wales was a key driver of the national result with the March 2012 seasonally adjusted number of loans for new housing (construction and purchase of new) up by 13.6%.

Elsewhere, Victoria rose by 1.7%, South Australia by 0.5%, Western Australia by 1.9%, Tasmania by 7.3%, the NT by 19.3% and the ACT by 12.1%. Queensland was the only jurisdiction which saw new home lending fall in the month of March (down by 2%).

The number of first-home buyer loans as a share of total owner-occupied home loans dropped to 16.4% in March 2012 from 17.2% in February 2012.