Fall in home loan approvals beats forecasts

The number of home-loan approvals fell by a bigger-than-expected 2.5pc in March.

An auction at Epping in Sydney. Pic: David Swift.

The number of home-loan approvals fell by a seasonally adjusted 2.5 per cent in March from February, the Bureau of Statistics said.

Economists had expected a 0.5 per cent fall for the month.

The value of loans for investment housing fell by 2.7 per cent in March from February, the ABS said.

Finance approvals to build new houses rose by 0.1 per cent in March. Approvals to buy newly built dwellings fell by 4.7 per cent, while lending for the purchase of established homes fell by 3.3 per cent in the month.

House price have been tumbling for several months, with Sydney and Melbourne leading a decline that is widely expected to extend into 2020.

The drop in house prices so far is the biggest since the financial crisis a decade ago, and has dented consumer spending and economic growth.

The slowdown in the economy has brought the Reserve Bank of Australia to the cusp of cutting interest rates, with any hint of emerging weakness in hiring likely to bring the central bank off the sidelines for the first time since August 2016.

Markets have priced in a 30 per cent likelihood of a cut in June.

The slump in housing also reflects tightened mortgage lending by banks, while a scathing inquiry into the misdeeds of banks has also prompted caution.

Dow Jones Newswires