Mortgage Broker Says Australian Home Loan Approvals Tumble In January

Post by NeilMc on February 8, 2010 · Under Australian Economy, Business News, Company News, banking, home loans, interest rates, mortgages · Comment 

New figures from a leading mortgage broker suggests that Australian’s are feeling the effects of three consecutive interest rate increases and the paring back of federal government grants, with demand for home loans declining sharply during the month of January.

Mortgage broker Loan Market Group says it has seen approvals for mortgages drop by as much as 40 per cent, from its peak set in 2009, and that January was the quietest month it had seen since January 2006.

“The three successive rate rises in the final three months of 2009 definitely had an impact on home buyers and we didn’t see the need for the RBA to put rates up this month. There is no doubt that the removal of government stimulus is having an impact on the market.” chief operating officer Dean Rushton said in statement.

The federal government’s first time home buyers grant was pared back at the end of last year to its original level of $7,000.

Last week, the Reserve Bank of Australia opted to hold interest rates steady, surprising the markets which had expected a fourth consecutive 25 basis point increase.

According to Mr. Rushton, there is a chance that the central bank may again raise interest rates in March, but added that he failed to see any reason for a large increase in interest rates over the course of the year, which he says would undermine confidence in the Australian economy.

Mr. Rushton said the main cause for concern amongst consumers, despite the central bank holding rates steady, would be the major lenders increasing interest rates out of synch with the RBA.

“Major banks are no longer moving in line with the RBA, which is a development of concern to mortgage holders,” Mr Rushton said.

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