The number of new housing finance commitments to owner occupiers jumped by a stronger than expected 5.2% in March building on gains of 2.1% in February and 0.7% in January. Excluding refinancings, home loan commitments jumped an even stronger 6.8% in March. The breakdown of commitments in March was strong across the board with loans for construction up 4.6%, loans for newly built homes up 21.1% and loans for existing homes up 4.2%. The data confirm that home buying activity was already rising very strongly before the latest RBA rate cut. Most likely housing activity generally will rise very strongly over coming months. The rise in housing finance commitments also spell the beginning of the end of the weak run of monthly private credit readings. While the RBA says it has room to cut rates further we doubt whether it will actually cut rates again given the risk of fostering a housing boom.
