Data shows demand for home loans in Australia continues to drop

13:20, May 12, 2010      

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Australian Bureau of statistics data published on Wednesday has showed demand for home loans dropped for a sixth straight month in March, suggesting rising interest rates were already biting prior to the last two rate increases.

The data has showed that just 48,260 home loans were granted in March, a 3.4 percent seasonally adjusted decline from February, Australian Associated Press reported.

This was the smallest amount of home loans granted in one month in nine years, and was roughly in line with the three percent decline forecast by economists.

The proportion of first home buyers taking up a loan dropped to 16.1 percent in March, the smaller amount since April 2008.

This was down from 18.1 percent in February and a record 28.5 percent set in May last year when the federal government's more generous first home owners grant was in full swing.

The Reserve Bank of Australia has raised the cash rate twice since March to 4.5 percent, a total of six increases since October last year, and money markets were expecting further hikes to at least five percent before the end of the year.



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