Housing finance data for February 2014 was released early today by the Australian Bureau of Statistics (ABS). The data showed that over the month there were 52,460 owner occupier housing finance commitments.
The number of owner occupier housing finance commitments was at its highest level since October 2009 over the month. Owner occupier housing finance commitments increased by 2.3% over the month and 13.8% year-on-year.
Owner occupier housing finance commitments are split into refinance commitments and non-refinance commitments. Refinance commitments have increased by 6.0% over the month and 15.8% higher over the year.
Non-refinance commitments rose by 0.6% over the month and by 12.9% over the year. Refinance commitments are currently at their highest level since April 2008.
Looking at the value of housing finance commitments, owner occupier non-refinance commitments are up 0.3% over the month, owner occupier refinance commitments are 6.0% higher and refinance commitments are 4.4% higher.
On a year-on-year basis, owner occupier non-refinance commitments have increased by 17.5%, owner occupier refinance commitments are 27.9% higher and investment finance commitments are 32.3% higher.
As a proportion of all housing finance commitments over the month, owner occupier non-refinance commitments accounted for 43.4% of lending, investment commitments accounted for 38.8% of lending and owner occupier refinance commitments accounted for 17.8%.
As the chart shows, the proportion of lending to investors is high on an historical basis and remains at their highest levels since late 2003.
As a proportion of all lending to owner occupiers, first home buyers continue to show a relatively small level of market participation. In February 2014, first home buyers accounted for 12.5% of all lending to owner occupiers.
The 12.5% was down from 13.2% in January 2014 and also down from 14.4% at the same time in 2013. Although the proportion of lending to first home buyers is lower, the number of first home buyer loans was 0.6% higher over the month but -1.5% lower year-on-year.
The RP Data Mortgage Index (RMI) shows a strong correlation with the ABS owner occupier housing finance commitments data. The benefit of the RMI is that it is a more timely indicator of finance commitments produced each week.
At the end of March 2014 the index had recorded a further increase in activity indicating that the housing finance data results for March 2014 (when released in a month’s time) are likely to show a further rise in owner occupier housing finance commitments.