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Vivienne Kelly
A dip in home loan approvals has caused an industry stakeholder to question whether the RBA is doing enough to lift the Australian home finance market.
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ABS housing finance data for November 2012 reveal a 0.5 per cent decline in home loan approvals.
1300HomeLoan managing director John Kolenda said the result came after the RBA kept its cash rate on hold in November before deciding to reduce it by 25 basis points to 3.0 per cent in December.
“The RBA has been messing around with the cash rate for the past few years and for most of that time they have got it wrong,” he said.
Mr Kolenda claimed the cash rate is still 50 basis points above where it should be.
“What was needed during 2012 was bold action by the RBA, but what they delivered was too little, too late,” he said.
“It will be no surprise to see the RBA board lower rates again when they meet next month and we have some commentators predicting rates could go as low as 2.0 per cent this year.”
Mr Kolenda said more rate cuts from the RBA would help keep the market active.
“Consumers have been battered by gloomy economic news for a few years and they weren’t helped by the RBA raising interest rates seven times during 2009/2010 after taking the cash rate down to 3.0 per cent in response to the global financial crisis.”
The Housing Industry Association also expressed its disappointment that lending for construction and purchase of new homes for owner occupiers declined by 4.8 per cent.
HIA economist Geordan Murray said the results highlighted the fragility of present conditions.
“We would obviously like to have seen the housing finance record a positive move in November, particularly following the cut to interest rates in October. However, we don’t consider the overall picture to be negative. The number of loans for construction and the purchase of new homes are well above the levels we were seeing this time a year ago.
“In the second half of 2012, we had a number of interest rate cuts as well as substantial changes to government incentives in a number of states but it is still too early to untangle the impact these policy drivers are having on new home building at this point in time. We will be monitoring the housing finance data over the coming months to gauge the effects,” Mr Murray said.
