Experts worry that the "housing downturn" will hurt Australia`s economy because mortgages were hit hard in March.
According to data released by the Australian Bureau of Statistics (ABS) on Friday, the month-to-month drop in the monthly investor`s mortgage is 9 per cent, to 108.8 billion yuan, to a lowest level since January 2016, with a 1.9 per cent drop in the owner`s housing mortgage, according to data released by the Australian Bureau of Statistics (ABS).
Fears of further weakness in future lending are growing as March data does not capture the impact of tighter lending standards introduced by banks. Some economists even think it is possible to cut interest rates.
In the year to March, investor loans plunged 16.1%. On a seasonally adjusted basis, bank lending to all homeowners fell 2.2 percent to 53017, surpassing market expectations of a 1.5 percent drop. Total housing credit fell 4.4% to thirty one billion eight hundred and eighty nine million nine hundred and ninety nine thousand nine hundred and ninety nine yuan in March.
Regulators have stepped up their scrutiny of bank lending standards after the Royal Commission exposed problems, which could lead to further softening of the housing credit data.
Shane Oliver, chief economist at AMP, responded to the data on Twitter: "Housing credit was very weak in March and the impact of tighter lending standards is not yet fully visible."
"our view remains that there is still a lot of room for housing prices in Sydney and Melbourne to go downside and that the RBA will not move until 2020 without excluding a further rate cut."
Home buyers became very active from the end of 2017 to the beginning of 2018 following the introduction of stamp duty concessions and waivers, but the return of the group stalled in March.
The share of homeowners` loans in total loans fell to 17.4 percent in March from 17.9 percent last month.
Senior economist Stephen Koukoulas also responded to the data: "A sharp drop in housing credit commitments, a housing downturn associated with weak retail spending will pose significant downside risks to the economy, and it is already too late for RBA to cut interest rates further."
