Demand For Australian Home Loans Continues To Soften

Post by NeilMc on June 9, 2010 · Under Australian Economy, Business News, banking, home loans, interest rates, mortgages · Comment 

Demand for new mortgages declined to nine year lows during the month of April, as tighter interest rates reduced buyer enthusiasm for new homes economists say.

Finance commitments for owner-occupied housing fell 1.8 per cent in April, seasonally adjusted, to 47,669, the Australian Bureau of Statistics said on Wednesday.

Those figures represent the lowest number of new home loans for owner occupied housing since March 2001, and marks the seventh consecutive monthly decline housing finance commitments.

Some analysts had predicted that the decline in owner occupied housing finance commitments would be about 2.0 per cent in April.

Total housing finance by value rose by 0.8 per cent in April, seasonally adjusted, to $21.701 billion.

According to Stephen Roberts, chief economist at Nomura, the demand for housing loans has continued its downward trajectory as the prospect of increasingly tighter monetary policy has proven to deter buyers.

At the start of the month the Reserve Bank of Australia held interest rates steady after lifting them 6 times since October last year.

“We know housing affordability has deteriorated sharply for many buyers. You would be expecting this style of behaviour and you would not expect a change any time soon. It (the number of new home loans) has fallen 26 per cent since its recent peak (in June 2009). It is very much a soft indication for housing. With a lag, you would expect these numbers to flow through to building approvals and housing starts.” Mr Roberts said.


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