Australian Home Loan Approvals Fall To Their Lowest Level In A Decade
The number of mortgages declined for the second consecutive month during February with the state of New South Sales posting its biggest drop in over 14 years.
According to the Australian Bureau of Statistics the number of mortgages declined by 5.3 per cent during February and stood at 45,393, which is the lowest ever figure for home loan approvals since February 2001.
In seasonally adjusted terms, home loan approvals in New South Wales dropped by 10.1 per cent, the biggest such drop since February 1997.
Demand for mortgages in 2011 has been hit by natural disasters which have interrupted sales in certain areas of the country. Rising interest rates and added economic uncertainty also held back buyers from entering the market.
First time home buyers as a percentage of the market declined to 14.9 per cent in February, its lowest level since June 2004.
The average size of home loan for first-home buyers increased by $2700 to stand at $277,000 in February, whilst the average size of home loan for all home buyers fell by $2200 to stand at $281,500 during the same period.
Other states that posted declines were Victoria which registered as 4.6 per cent decline in home loan approvals, Queensland which fell by 0.5 per cent, Western Australia posted a decline of 2.1 per cent, and South Australia slid 5 per cent.
In Western Australia the number of home loans slid 2.1 per cent, while in South Australia, home loans sank 5 per cent.
The number of loans for the purchase of existing homes dropped 6 per cent in the month to 39,076, while the number of loans for newly built homes dived 12 per cent to 1745.
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Australians Increasing Shifting Away From Credit Cards For Debit Cards
Australians are increasingly shifting away from credit cards and using debit cards for their spending instead as they seek to cut down on their expenses.
According to a news report in the Sydney Morning Herald, purchases made using debit card rose by 25.8 per cent year on year, representing the fastest growth rate ever recorded.
Analysts says that Australians are becoming increasingly savvy and are focusing on obtaining the best deal and getting good value for money, in response to the financial crisis and since then higher interest rates
Recently the Australian central bank published data which suggests that Australians spend many millions of dollars every year simply checking bank balances at ATM’s.
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QBE On Track For Strong Profit Growth In 2011
Australian insurance major QBE says that it intends to either maintain or increase its dividend and expects that insurance profits before taxation will increase by as much as 30 per cent in 2011.
Belinda Hutchinson chairman of QBE, speaking at the company’s annual general meeting said that after completion of the first quarter 2011, QBE would meet its full year profit margin target of between 15 to 18 per cent.
Full year insurance margins, a key measure of profitability watched by investors is at 15 per cent, just short of the targeted 16 to 18 per range.
“Our targeted growth in premium income from acquisitions announced to date should see insurance profit, before tax, grow by at least 30 per cent in 2011,” Ms. Hutchinson said during her prepared speech.
Despite the robust outlook QBE’s targets are subject to some onerous conditions including large claims not exceeding allowance, exchange rate movements or sharp declines in equity or interest rate markets.
“Based on our outlook we anticipate at least maintaining our dividend in 2011,” she said.
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Australians Waste $32 Million A Year Checking Bank Balances
The Reserve Bank of Australia estimates that Australians waste as much as $32 million on fees to check their bank balances.
When an account holder wants to check their balance at a “foreign” ATM, they are being hit with a fee which ranges from $1.82 to $2.85 for that privilege. Data from the central bank suggests that Australian spent $540 million in “foreign” ATM fees in 2010, and of that nearly 6 per cent was spent on balance checking transactions.
Despite the RBA’s best efforts to increase transparency, it has conceded that ATM fees are not always obvious to consumers.
“While consumers are highly sensitive to whether or not they pay ATM fees, it is not clear that they are particularly sensitive to differences in the levels of foreign ATM charges applied by different owners,” it says in response to a question on notice from the Senate economics committee inquiry into banking.
“This may be because consumers are not sufficiently aware of these differences and must proceed a substantial way through entering a transaction before the level of the direct charge is revealed.”
The admission by the central bank represents a victory for consumer advocacy groups, many of whom have been lobbying for the mandatory display of fees by ATM owners on the outside of machines similar to the way petrol stations display their petrol prices.
The Reserve Bank and the Treasury are due to recommend reforms to ATM transactions in June.
Remote ATM’s can charge as much as $10 a transaction according to research from the Australian Financial Counselling and Credit Reform Association. CBA has categorically ruled out the reduction of fees for non bank customers, saying such a move would encourage “freeloaders” the lender told the Senate committee.
“Without the ATM fee, or with a reduced fee, the infrastructure (of ATMs) may not be available to our own customers. Others would free-ride on that investment.”
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Australian Residential Property Prices Remain Stable During February
The price of Australia residential property remained stable during February as interest rate hikes towards the end of last year took some of the fizz out of the market.
According to the RP Data Rismark index, home prices in cities across the nation were unchanged in February after falling by a seasonally adjusted and revised 1.5 per cent in January, the biggest such decline since the index began tracking prices in 2005.
“When you consider that Australian inflation was 2.7 per cent in the year to December 2010, in real terms Australian residential property values have been declining, which is a good outcome for prospective buyers,” said RP Data senior research analyst Cameron Kusher.
The update from the property research groups noted: “A (near) double interest rate hike in November 2010 combined with numerous natural disasters has conspired to make the last three months difficult ones for Australia’s housing market.”
The central bank began hiking interest rates in 2010, making borrowing more expensive. The Reserve Bank will once again meet next Tuesday to decide the future course of interest rates, with the market pricing in a 7 per cent probability that the central bank will respond to instability in the Middle East, and the European sovereign debt crisis, with a cut in interest rates.
Prices of residential properties in Melbourne declined by 1.8 per cent during the quarter ending February, whilst Sydney prices inched up by 0.3 per cent over the same period according to RP Data-Rismark. During the same time frame, prices in flood stricken Brisbane experienced a decline of 3.3 per cent, whilst prices in Perth declined by a seasonally adjusted 1.9 per cent.
The national city median dwelling price in February was $459,000, RP Data said.