Australian Home Buyers Take Advantage Of Low Interest Rates

Post by Sharat on August 31, 2009 · Under news · Comment 

Australian’s have been taking advantage of half century low interest rates, and government subsidies,  with the number of mortgages taken on the increase, according to research from a credit provider.

Despite the increase in mortgages, the number of personal loan and credit card applications has fallen.

Veda Advantage’s survey of consumer credit demand showed a 28 per cent rise in applications for home loans in the year to June 30. Credit card and personal loan enquires however dropped by 20 per cent in the June quarter, compared with the same time period in the previous year.

“Veda’s measure of mortgage enquiry growth and volumes for the June quarter, 2009, is higher than at any time in the past five years. This is continuing high level of demand is a response to high levels of housing affordability, low interest rates and the federal government’s first home buyers’ grant.” a spokesperson for the company said.

The Reserve Bank of Australia, in response to the global crisis in financial markets reduced interest rates to half century lows, cutting official interest by 425 basis points between September 2008 and April 2009.

In order to bolster the Australian property market, the Federal Government doubled the subsidy for first time home buyers to $14,000 for existing houses, whilst subsidies for newly built homes tripled to $21,000.

Demand for home loans have increased every month between October and June this year, data from the Australian Bureau of Statistics showed.

Contrastingly, Veda Advantage’s survey showed that credit card and personal loan enquiries continued on a downward trajectory. Personal loan applications have fallen for seven consecutive quarters, down 17 per cent in the quarter ending June 30th 2009, compared with the same time period in the previous year.

Credit card enquires fell by even more, dropping 22 per cent in the second quarter compared with the previous year. Over the course of the quarter, credit card enquires fell by 12.4 per cent, the largest quarterly decline in five years since the company began collecting data.

“The message is that this continued softening in demand for personal loans and credit cards by Australians shows people are taking a conservative outlook. I don’t think it is a lack of confidence in the market place, it is more around them being conservative in signing up for more debt.” the spokesperson said.


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