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By: Staff Reporter
The RBA has all but confirmed that home buyers can expect a reprieve from rising rates, after admitting that its rapid succession of rate rises had hit household spending and curbed borrowing.
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Data from the Australian Bureau of Statistics shows housing finance to owner-occupiers weakened in March, falling 3.4 per cent.
In addition, finance approval numbers to owner-occupiers fell 25 per cent in six months.
Westpac’s chief economist Bill Evans said the reduction of stimulus helped dampen demand for finance.
According to a recent Westpac report, the RBA’s move to begin normalising interest rates since October together with the phase-out of the additional bonus under the government FHB scheme contributed to the falling numbers.
“The impact on the housing sector is material and is an argument for the RBA shifting to a pause – at least until the next inflation update,” Mr Evans said.
But any relief in the official cash rate is likely to be short lived as commodity prices are expected to fuel the biggest business investment boom in the nation’s history, increasing the strain on the economy and fuelling greater inflation.
