Lending hit by higher rates

Lending hit by higher rates

by 0 comments

The number of loans for new dwellings has dropped for the second consecutive month as the effect of three rate rises last year begins to make its mark on borrowers.

According to the Australian Bureau of Statistics, the number of loans for new dwellings dropped by 6.4 per cent in December, following a 7.1 per cent drop in November.

The Real Estate Institute of Australia (REIA) president David Airey said the data suggests the Reserve Bank’s decision to keep interest rates on hold in February was justified.

“The evidence is showing that caution is still needed in monetary policy,” he said.

The proportion of first home buyer loans now sits at 21 per cent, the lowest since October 2008 and well down on the peak of 28.5 per cent seen in May 2009.

Housing Industry Association chief economist Dr Harley Dale said government incentives for new home buyers would help ramp up lending once more.

“Targeting incentives on new dwellings makes a lot more sense than pumping money into the churning of established dwellings,” he said.

“The tilting of first home grants to new dwellings has lifted both the demand for new homes and the level of new home construction.”

The number of loans for new dwellings has dropped for the second consecutive month as the effect of three rate rises last year begins to make its mark on borrowers.

According to the Australian Bureau of Statistics, the number of loans for new dwellings dropped by 6.4 per cent in December, following a 7.1 per cent drop in November.

The Real Estate Institute of Australia (REIA) president David Airey said the data suggests the Reserve Bank’s decision to keep interest rates on hold in February was justified.

“The evidence is showing that caution is still needed in monetary policy,” he said.

The proportion of first home buyer loans now sits at 21 per cent, the lowest since October 2008 and well down on the peak of 28.5 per cent seen in May 2009.

Housing Industry Association chief economist Dr Harley Dale said government incentives for new home buyers would help ramp up lending once more.

“Targeting incentives on new dwellings makes a lot more sense than pumping money into the churning of established dwellings,” he said.

“The tilting of first home grants to new dwellings has lifted both the demand for new homes and the level of new home construction.”

promoted content
Recommended by Spike Native Network
Listen to other installment of the Real Estate Business Podcast
reb top 100 agents 2017

With a combined sales volume of over $14 billion in 2017, the Top 100 Agents ranking represents the very best sales agents in Australia. Find out what sets them apart and learn their secrets to success.

featured podcast

featured podcast
Marnie Seinor on structure, database DNA and connecting with her local community

There’s no such thing as an “off switch” in real estate – so says McGrath agent Marnie Seinor, who came in at number 78 in this year...

View all podcasts

Does the benefit of being part of a branded group outweigh the cost?

Yes
No
Depends on the group
Do you have an industry update?