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1360.0 - Measuring Australia's Economy, 2003  
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 03/02/2003   
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The trend series for secured finance commitments to individuals for owner occupied housing has shown two major periods of activity since July 1990. The series peaked at $4,351m in April 1994 before declining to a value of $3,283m in March 1995. The series then increased gradually until November 1998, after which it grew very strongly until December 1999 partly due to construction work before the introduction of The New Taxation System in July 2000. A weakening construction finance series, along with rising interest rates contributed to a steep decline in the series from its December 1999 peak to a low of $5,487m in August 2000. Since then the series has steeply increased, influenced by the first home owner scheme which operated over this period. The series concluded at a record level of $8,522m in September 2002.




SECURED HOUSING FINANCE COMMITMENTS TO INDIVIDUALS(a)
Period
Construction
of dwellings

$m
Purchase of
newly erected
dwellings

$m
Purchase of
established
dwellings(b)

$m
Total

$m
New bank
home loans
interest rate(c)

%

ANNUAL
1996–1997
6,649.1
2,653.9
40,676.3
49,979.3
7.20
1997–1998
8,380.5
2,907.4
43,374.8
54,662.7
6.70
1998–1999
9,355.8
2,801.6
49,342.4
61,499.9
6.50
1999–2000
10,616.7
2,840.8
61,494.8
74,952.3
7.80
2000–2001
7,393.6
2,737.6
64,293.2
74,424.4
6.80
2001–2002
11,531.6
3,511.1
81,438.9
96,481.7
6.55

MONTHLY (TREND)
2001–2002
July
934.7
312.3
6,542.4
7,789.5
6.80
August
967.4
320.5
6,638.3
7,926.2
6.80
September
985.7
322.5
6,696.4
8,004.5
6.55
October
993.7
319.2
6,739.1
8,052.0
6.30
November
992.9
311.0
6,768.9
8,072.8
6.30
December
983.9
300.3
6,789.9
8,074.2
6.05
January
968.0
289.6
6,812.7
8,070.3
6.05
February
947.9
279.6
6,840.3
8,067.8
6.05
March
930.0
271.3
6,877.0
8,078.4
6.05
April
919.4
265.7
6,933.4
8,118.6
6.05
May
917.8
261.9
7,006.8
8,186.5
6.30
June
921.6
258.9
7,092.9
8,273.5
6.55
2002–2003
July
924.9
255.9
7,184.8
8,365.6
6.55
August
926.3
253.3
7,272.4
8,452.0
6.55
September
926.9
250.7
7,344.5
8,522.1
6.55

(a) Excluding alterations and additions.
(b) Including refinancing.
(c) Data are at end of period.

Source: Housing Finance for Owner Occupation, Australia (5609.0), and Reserve Bank of Australia Bulletin.


Explanatory Notes

The housing finance series represents the monthly value of commitments by financial institutions to provide finance for the purchase of owner occupied housing. The value of finance commitments may increase as the number of commitments increases, or as the average size of all commitments increases. A finance commitment usually (but not always) precedes the provision of finance by the lender to the borrower. For example, a lender may make a commitment to lend a specified amount for the construction of a dwelling, and then progressively provide the finance over a number of months as construction work is completed.

Not all housing purchases are financed by a loan from a financial institution. A dwelling may be bought without the need for a loan, or a loan may be obtained from a family member, a solicitor or an accountant (or other non-financial entities).

Monetary policy influences the interest rate lenders charge housing finance borrowers. When monetary policy is tightened, short term interest rates rise, and there is upward pressure on the cost of borrowing. When monetary policy is loosened, short term interest rates fall, and there is downward pressure on borrowing costs. Interest rates have an important bearing on the demand for housing finance.


Further Reading

Housing Finance for Owner Occupation, Australia (5609.0)
Presents data on secured finance commitments to individuals for construction of dwellings, purchase of new and established dwellings by banks, permanent building societies and other lenders.

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