Low rates boost fi­nance

The Riverine Herald - Local Real Estate - - LOCALREALESTATE.COM.AU -

In­ter­est rate re­lief from the Re­serve Bank of Aus­tralia (RBA) this year has boosted in­vestor con­fi­dence and stim­u­lated new dwelling fi­nance but more cuts are still needed, says mort­gage bro­ker net­work 1300HomeLoan. 1300HomeLoan man­ag­ing di­rec­tor John Kolenda said the ABS hous­ing fi­nance fig­ures for Oc­to­ber high­lighted grow­ing vol­umes in in­vest­ment loans and the pur­chase of new dwellings. But the ABS data found home loans for owne­roc­cu­piers rose just 0.1 per cent in Oc­to­ber, sea­son­ally ad­justed, with gains driven mainly by new dwellings and in­vestors. ‘‘While we con­tinue to see a mixed bag for the home fi­nance sec­tor, there’s been an en­cour­ag­ing re­cov­ery for loans for the pur­chase of a new dwelling, which rose 4.2 per cent in Oc­to­ber, 2012,’’ he said. ‘‘This was the fifth con­sec­u­tive rise of 4 per cent or more for new dwelling loans. ‘‘Although the num­ber of loans for con­struc­tion is back to its low­est level since Jan­uary this year, fall­ing 0.9 per cent, lower in­ter­est rates ap­pear to be buoy­ing in­vestor con­fi­dence with in­vestor loans up 5.5 per cent in Oc­to­ber. ‘‘Changes to first-home owner grants favour­ing new homes in some states and ter­ri­to­ries have stim­u­lated the ac­tiv­ity in new dwelling fi­nance. ‘‘But first-home buy­ers over­all are not rush­ing back to the mar­ket de­spite lower in­ter­est rates. ‘‘They make up 18.7 per cent of the mar­ket com­pared to the peak of 31.4 per cent in May, 2009, when there was a com­bi­na­tion of near record low-in­ter­est rates and boosted fed­eral government in­cen­tives for first-time buy­ers.’’ Mr Kolenda said Aus­tralian con­sumers re­mained cau­tious de­spite the RBA low­er­ing its cash rate by 125 ba­sis points to 3 per cent dur­ing 2012. ‘‘While some sec­tors of the home fi­nance mar­ket are on the im­prove, we’re a long way from be­ing out of the woods and it’s go­ing to take even more stim­u­lus and more rate cuts to change that sen­ti­ment,’’ he said.

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