Home loan approvals fall despite rate cut
RECENT rate cuts have not caused a rise in the number of Australians taking out home loans.
RECENT interest rate cuts have not caused a rise in the number of Australians taking out home loans.
The number of home loans approved fell 1.2 per cent in May, figures released by the Australian Bureau of Statistics today show.
Commonwealth Bank senior economist Michael Workman said the fall wasn't surprising, despite the Reserve Bank of Australia's decision to cut the cash rate by half a per cent in May.
He said it usually took several months for interest rate cuts to have an impact on the number of people taking out loans.
"Usually it takes a little while for people to get organised and do something about it,'' he said.
"You'd expect to see a pick in in lending in August or September, particularly if we get another interest rate cut next month.''
Mr Workman said the fall in property prices over recent years may also be deterring people from taking out loans at present.
"It is still a buyers market out there, so people can hold if they think prices are going to go a little bit lower.''
Sydney JP Morgan economist Tom Kennedy said the data exhibited a much weaker trend of home loan take-up than the previous reading.
"New dwellings came off 7.3 per cent, so they were the largest drag on these figures,'' he said.
"However, there appears to be weakness across the data generally.''
Global economic uncertainty appeared to have discouraged would-be homeowners in May, Mr Kennedy said.
"This data is the first to include the period when the Reserve Bank (of Australia) cut the cash rate by 50 basis points,'' he said.
"However, that doesn't seem to have boosted the numbers at all.
"I think the weak international environment weighed more on consumers' psyche than the rate cuts or domestic data.''