From UBS:
* Home loans jumped 4.3% m/m in December - strongest rise in over 2 years
The value of housing finance (ex-refis) jumped by 4.3% m/m in November, above expected (UBS 3%, mkt nf), and the strongest gain in over two years (since Sep- 09), to the highest level since mid-10 (+1.6% y/y). Coupled with a 3.3% rise in November (revised up from 2.8%), this was the best two months since early-09 (when interest rates troughed). In 2H11, loans rose 7%, after 1H11 dropped 5%.
* NSW the clear leader; first home-buyer share up to a 2-year high
For owner-occupiers: the number of loans rose 2.3% (UBS 3.0%, mkt 1.8%, after 1.8%), the ninth straight rise totalling 18%. By State, the rising trend is clearly led by NSW (6.1%), with a 10th rise to the highest level since Sep-09 (although the expiry of stamp duty tax breaks for existing property at end-11 may dent the momentum somewhat). The fixed loan share rose again (11.7%, doubling from 5.9% in August) to the highest since mid-08 – amid fixed rates dropping over 1%. The first home buyer share of all loans also rose to a two-year high (13.9%, up from 10.9% in August).
* Implications…home lending shows clear improvement amid lower rates
Overall, today's data shows a clear improvement in the trend for housing lending, particularly during the last two months of 2011 as the RBA cut the cash rate by a cumulative 50bp (with mortgage rates following the move) and fixed rates dropped over 1% since mid-11. This points to an emerging upswing in the housing sector (with NSW the key driver), something we have been forecasting for several months on the back of a policy shift by the RBA and improved sentiment toward buying a house. Further, the construction lending details also point to a significant lift (+10%) for residential building approvals over the coming few months, to at least in line with our forecast of 148k housing starts in 12/13 (from ~130k currently), as well as some stabilisation and improvement in the declining trend of housing credit growth over coming months
