Stephen McMahon | Herald Sun | November 10, 2011
Demand for mortgages was climbing ahead of the Reserve Bank’s move last week to lower interest rates, according to official figures.
The number of home loans approved in September rose 2.2 per cent to almost 51,821 — but there are signs buyers are borrowing less and putting more of their own money into property purchases.
Despite the rise, the market for new homes is still in decline with buyers instead snapping up established properties as prices fall.
In Melbourne prices fell an average of almost 3 per cent — or $16,000 — in the three months to September.
Buyers’ reluctance to borrow heavily was laid bare in the Australian Bureau of Statistics data, with the value of total housing finance rising just 1 per cent in September, seasonally adjusted, to $21.1 billion.
The number of home loan approvals climbed at double the rate.
The figures were released as Westpac and the Melbourne Institute published their monthly consumer confidence index, showing that confidence has improved for the third consecutive month.
Citigroup economist Paul Brennan said the RBA’s 25-basis-point cut to the official interest rate appeared to have “outweighed” the negative sentiment coming from Europe.
But he warned much of the lending rise was coming from NSW and could partly reflect the changes to stamp duty concessions there.
JP Morgan economist Ben Jarman said the data would provide support to housing.
“We’re not getting too excited that the housing market is going to start tearing away any point soon,” he said. “But it’s certainly good that you’re getting some dividend from a withdrawal of the rate hike talks.”
The Westpac/Melbourne Institute Index of Consumer Sentiment climbed 6.3 per cent in November to 103.4 index points.
This is the first time in six months that the proportion of optimists exceeded that of pessimists.
Westpac chief economist Bill Evans said this was clearly a result of the RBA’s decision to lower rates.
He said the significance of the decision was apparent from the breakdown in responses by home ownership, with the data showing confidence among mortgage holders rose 13.9 per cent.
Sentiment climbed just 6 per cent for people who owned their house outright.