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Date Published : Wednesday, August 06, 2008
Approvals for new home loans fell for the fifth month in a row in June, with the decline outstripping analysts' expectations, it has been reported.
According to the Age, a 12-year high in interest rates were blamed for June's decline, which saw new home loans fall by 3.7 per cent compared to May.
Economic experts polled by the Bloomberg news service had predicted a decrease of around two per cent, the newspaper said.
The overall value of new home loans also fell, the figures from the Australian Bureau of Statistics show, from $18.1 billion in May to $18.04 billion in June.
Matt Robinson of Moody's Economy, said the numbers added up to a "sizeable" decrease, adding that new mortgages have now fallen by a quarter since the start of the year.
The newspaper said the figures are another indication that the economy is slowing down and they will add to the "mounting case" for the Reserve Bank of Australia (RBA) to reduce interest rates sooner rather than later.
Many market analysts believe it is now a "certainty" that the RBA will take rates down from their current level of 7.25 per cent when its board meet in September. Experts say there is around a one-in-four chance the reduction will be as much as half a percentage point, the publication added.
If the RBA does reduce interest rates next month, it will be the first time they have come down since December 2001.
Yesterday, it was announced that the RBA's board had decided to leave interest rates unchanged, although it acknowledged that the scope for a future reduction had increased.
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