According to the Australian Finance Group’s (AFG) latest Mortgage and Competition Index, lending volumes fell by 10 per cent nationwide in the three months to 31 March 2019 (3Q19), from 25,536 to 23,049.
This represents the lowest quarterly figure reported in six years, according to AFG.
Further, the total value of mortgage lodgements also declined, falling by 10 per cent ($1.3 billion) quarter-on-quarter, from $12.9 billion to $11.6 billion, and by 16 per cent ($2.2 billion) from $13.8 billion in the previous corresponding period.
For CEO of AFG David Bailey, these numbers signal clearly to policymakers that they should approach the lending market with caution.
“The numbers provide stark evidence that the lending environment has significantly deteriorated,” he said.
“It’s a wake-up call for policymakers,” he added.
“The softening of the residential market across the country is a real concern, with Sydney and Melbourne driving the downturn and some states enduring a prolonged period of falling activity,” he said.
“The data confirms we have reached a critical time in the housing market cycle, and we would urge policymakers to tread carefully in any regulatory responses flowing from the royal commission,” he said.
“This is a time for considered policy formulation that considers the full potential impact on the lending market,” he added.
“It is clear, the broader implications for the Australian economy are huge if we get it wrong,” he said.