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Economy in Brief

Australia Home Financing Commitments Recoup 2004 Reductions
by Carol Stone May 12, 2006

After some contraction in 2004, home finance in Australia has strengthened considerably. In data reported at midday May 12 in Canberra, the Australian Bureau of Statistics (ABS) indicated that housing commitments totaled 59,724 in March, up 423 from February and 7.5% from March 2005. The value of these commitments was A$13,124.4 million, up 11% from the year-earlier month.

In the table below, we show the finance commitment data by purpose. We have combined it a bit differently than ABS presents. We added construction commitments to those for the purchase of new homes; this "new home financing" was nearly flat in March, up just 0.2%, but these commitments are up 10.5% from a year ago. ABS's measure of existing home purchase commitments includes those for refinancing, but we have pulled them out, so the entry in our table includes only actual purchases of "established dwellings". These financing commitments were up 0.9% for the month and 7.3% for the year.

The number of commitments for refinancing was 17,509 in March, 0.5% larger than in February and, moderating a bit, just 6.7% above March 2005. The volume of refinancing activity hit a peak during 2003, just a few months after a trough in interest rates, shown in the graph using 10-year Treasury bonds. Looking at this interest rate with a 6-month lead, we see a substantial 76% negative correlation with refinancing activity since 2000.

The number of existing home purchase commitments also peaked during 2003, and are only now re-approaching that amount.

These data are contained in Haver's ANZ database. All of the various calculations discussed above are made using DLXVG3. We can add or subtract two series and take growth rates on the newly constructed series, just as with the original ones. We can also edit the title to match the calculation, using the Graph dropdown menu item "Titles". Lead and lags in a series are implemented using CTRL together with the left- or right-arrow key.

Monthly Averages
Australia: Housing Finance Commitments, SA Mar 2006 Feb 2006 Jan 2006 Mar 2005
2005 2004 2003
Total Units (000s) 59.72 59.30 58.46 55.57 56.11 51.18 56.66
Value (Bil.A$) $13.124 $13.040 $12.731 $11.829 $12.046 $10.400 $10.336
Construction + Purchase of Newly Built Houses (000s) 7.27 7.25 6.99 6.58 6.68 6.33 6.63
Purchase of Established Houses (000s)* 34.95 34.63 34.22 32.58 32.56 29.21 33.55
Refinance of Established Houses (000s) 17.51 17.42 17.26 16.41 16.86 15.64 16.48
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