Weakness In Australian Home Lending Sector Continues

Post by Sharat on September 8, 2010 · Under Business News, banking, home loans, mortgages · Comment 
Weakness In Australian Home Lending Sector Continues

The Australian home loan sector continues to remain weak, enabling the Reserve Bank of Australia to maintain interest rates steady leading economists say. According to the Australian Bureau of Statistics Australian housing finance commitments for owner-occupied housing rose 1.7 per cent in July.

The marginal increase in lending failed to impress Savanth Sebastian, an economist for CommSec, who said the rise compared to the over all decline in mortgage lending during 2010 was “effectively a drop in the ocean”,

Mr. Sebastian added “We’re coming off really what has been nine year lows in terms of housing finance so it’s heartening to see at least its travelling back up in the right direction but you really wouldn’t say that it’s anything too dramatic. The sustained weakness in housing finance suggests that property prices are likely to consolidate. Given that auction clearance rates have fallen and we’ve seen a general lack of demand, I think it will take the Reserve Bank to remain on the sidelines to give consumers and potential home buyers confidence to go out there and make purchases.” he said.

The total value of home loans increased by 0.7 per cent during July, to a seasonally adjusted level of $20.854 billion.

Mr. Sebastian added that the recent 2.3 per cent reduction in investment properties were largely as a result of analysis which suggested that property prices would move sideways for a period of time.

“Investors now have the opportunity to pick and choose rather than having to rush into the marketplace and that’s probably one of the reasons why you’ve seen that fall in investor housing.”

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