Australian Home Loans Fall 1.2%

14 March 2012 01:00am - Jack Stupple

Australian Home Loans Fall 1.2%

The Australian Bureau of Statistics have said that the number of home loan approvals has fell by 1.2% in January to 47,768 putting an end to a nine-month series of rises. This decline was considerably more than the 0.6% drop economists had predicted. The data also showed that total housing finance, total lending to homeowners and investors combined, fell 2.3%, to $20.732 billion. The fall in approvals came after the Reserve Bank of Australia decided to keep interest rates at 4.25%. The average size of a loan was down by 3%, at $313,600, in January 2012 compared with $338,600 in 2011.

Michael Workman, Commonwealth Bank senior economic said, “In a general sense, we’re still looking at a very gradual pick-up in lending into the housing market as a result of the interest rate cuts, but it’s quite slow.” Mr Workman did add that the figures were unlikely to be of a major concern for the RBA – “I think the moderate pace of approvals in home loans is probably one of those things the Reserve Bank wouldn’t mind too much given that the level of construction activity remains relatively weak. If there was any sharp pick-up in the amount of borrowing anyway it would tend to find its way into the prices of established homes which is probably not a good thing.”

Another survey of 500 companies released today showed that business confidence fell in February to the lowest level since September 2011.

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