Housing Commitments vs Std Variable Interest Rate

[WinstonWolfe]

Thought this plot was telling.

SVR is inverted to highlight the inverse correlation with number of housing finance commitments. i.e. inverting positively correlates the plots.

2004-2007 becomes apparent as an unusual period where rate rises suppressed commitments momentarily, only to see them rebound strongly.

It will be interesting to see how sensitive commitments are to small increases in rates over the next few years.

The correlation will be confounded by variation in popn growth, purchases by foreigners, and lenders loosening LVRs, DSRs, and postcodes.

 

[WinstonWolfe]

Another interesting observation is that in 2008, the SVR had to rise to 9.6% to drop commitments to 33,000 per month.

This year, the SVR has only had to rise to 7.4% to drop commitments to the same level.

 

[oracle]

Another interesting observation is that in 2008, the SVR had to rise to 9.6% to drop commitments to 33,000 per month.

This year, the SVR has only had to rise to 7.4% to drop commitments to the same level.

Does that mean it is highly unlikely SVR will go as high as 9.6% this cycle?

Cheers,
Oracle.

 

[WinstonWolfe]

Does that mean it is highly unlikely SVR will go as high as 9.6% this cycle?

Cheers,
Oracle.

What I think it means is the RBA will be monitoring commitments closely.
If they fall to 30,000 (the level they were at 10 years ago), downwards pressure on cap city medians will be significant. And keep in mind the Australian population is 32% bigger today than 2000.

What the RBA does on Melbourne Cup Day will be very interesting, as will be the response of commitments to a rate rise.

I am sensing the RBA are slowing delivery of rate rises, so as to let the shock be absorbed. Though obviously their hesitancy is also due to uncertainty about general economic robustness.

 

[Aaron Sice]

couldn't agree more with that ^^^.

 

[boz]

Thought this plot was telling.

SVR is inverted to highlight the inverse correlation with number of housing finance commitments. i.e. inverting positively correlates the plots.

2004-2007 becomes apparent as an unusual period where rate rises suppressed commitments momentarily, only to see them rebound strongly.

It will be interesting to see how sensitive commitments are to small increases in rates over the next few years.

The correlation will be confounded by variation in popn growth, purchases by foreigners, and lenders loosening LVRs, DSRs, and postcodes.

I think global economy condition must be considered,
my view is that the up and down in rates and commitment we have seen in the last 2 year is probably likely to continue in the future, relaation to local rates will have less impact then untill few years ago. This is a consequence of US monetary and economic policies