Slow approvals hint at rate cut
SLOWING activity in the home finance sector provides further pressure for the Reserve Bank of Australia to consider a rate adjustment next month, according to leading mortgage broker Loan Market.
Loan Market corporate spokesperson Paul Smith said the latest Australian Bureau of Statistics figures for January 2012 show a small 1.24 per cent drop in the number of home loan approvals from December 2011.
"While we had seen nine months of increasing activity and January is traditionally a slower month, stalling in this sector does provide further evidence for a rate cut in coming months," he said.
Mr Smith said a major factor in the flat result was the downturn in New South Wales activity following the end of stamp duty concessions for first home buyers on certain properties.
"Nationally, there were only 600 less approvals from December 2011 to January 2012, but in NSW specifically, the number dropped by just over a thousand," he said.
Mr Smith said while overall conditions in the economy were sound and the RBA cash rate sits at a modest 4.25%, there is an undercurrent of consumer caution that is stalling sectors such as retail.
"While it's to be noted that many economic indicators are in targeted ranges, there may be scope for an interest rate cut to boost certain sectors that aren't responding," he said.
"With lenders now appearing to move independently of the RBA's rate decisions, many consumers are uncertain of the direction of home loan rates."
But Mr Smith said that even though lenders are dealing with a challenging funding environment, the RBA still has significant influence over the home finance market.
ABS Housing Finance - January 2012 Results
- National -1.24%
- NSW -6.26%
- VIC 0.94%
- QLD 0.03%
- SA 1.27%
- WA 3.78%
- TAS 3.23%
- NT -8.29%
- ACT -1.81%
These figures represent the increase/decrease in the value of new dwellings committed to in January.