Demand for home loans continued to fall in February, even before the two latest interest rate increases, data released on Monday shows, according to a Yahoo Finance article published on 12/04/2010.
Just 50,287 mortgages were granted to owner-occupiers in February, down by a seasonally-adjusted 1.8 per cent compared to January, the fifth consecutive month of decline, Australian Bureau of Statistics data shows.
Economists’ forecasts had centred on 1.0 per cent fall in February home loan commitments.
Last year’s three interest rate rises and an end to the federal government’s more generous first homebuyer grant at the end of 2009 were blamed for the steady drop-off in mortgage demand.
The Reserve Bank of Australia has since raised the cash rate twice this year, the most recent being at last week’s monthly board meeting that took the cash rate to 4.25 per cent and 125 basis points above its 2009 trough.
First homebuyers made up 18.1 per cent of loans granted in February compared to 20.5 per cent in January, and down from a record high of 28.5 per cent in May 2009.
Investment loans also fell 1.1 per cent, from a revised 0.9 per cent rise in January, while the value of loans slumped 4.4 per cent to $14.08 billion, seasonally adjusted.
It seems that the impact of foreign buyers in the local market is significant. The Foreign Investment Review Board currently has 50 investigations under way into suspicious purchases of local property, the government said last week.
Home prices have increased 12.7 per cent in the year to February, according to research group RP Data-Rismark.
Home prices will likely continue to rise in 2010 because of sustained demand for housing through population growth and a weakening outlook for housing supply.
This demand and supply imbalance also explains why auction clearance rates remain very high along with house prices themselves – over the weekend, auction clearance rates remained above 70 per cent in Sydney and Melbourne.’