Australian home loan approvals fall despite interest rate cuts

PUBLISHED : Wednesday, 16 January, 2013, 12:00am
UPDATED : Wednesday, 16 January, 2013, 5:19am


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Australian home loan approvals unexpectedly fell in November for the first time in four months as central bank interest-rate cuts failed to boost demand from first-time buyers.

The number of loans granted to build or buy houses and apartments fell 0.5 per cent from October, when they rose 0.1 per cent, said the statistics bureau.

The median estimate in a Bloomberg News survey of 20 economists was for approvals to increase 0.5 per cent.

The central bank has reduced the overnight cash rate target six times since November 1, 2011, to 3 per cent in order to spur hiring and revive the housing market.

Policymakers are aiming to rebalance Australia's two-speed economy, where mining regions in the north and west thrive and manufacturers, retailers and builders in the south and east struggle.

"Developer and homebuyer sentiment remains weighed down by a soft economic outlook," said David Cannington, an economist at Australia & New Zealand Banking Group. The statistics bureau report showed the total value of loans fell 0.8 per cent to A$21.5 billion (HK$175.5 billion) in November.

The value of lending to owner-occupiers gained 0.6 per cent, the report showed. The value of loans to investors who plan to rent or resell homes dropped 3.3 per cent.

First-home buyers accounted for 15.8 per cent of dwellings that were financed in November, down from 18.7 per cent in October and lower than 20.2 per cent a year earlier, the report showed.

Reserve Bank of Australia Governor Glenn Stevens and his board last month cut the benchmark rate to 3 per cent, matching the half-century low set during the 2009 global recession.