Australian housing finance figures show home loan demand growing

13:32, December 08, 2010      

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Better-than-expected housing finance figures from the Australian Bureau of Statistics (ABS) show Australia's home loan demand has stabilized and is growing again, said economists on Wednesday.

Australian housing finance commitments for owner-occupied housing rose 1.9 percent in October to 49,307, the ABS said on Wednesday.

This followed a 1.3 percent rise in September.

The median market forecast was for a 0.3 percent rise in housing finance commitments in the month.

Total housing finance by value rose by 2.2 percent in October to 20.90 billion AU dollars (20.52 billion U.S. dollars).

"Obviously because the RBA hiked in November, there are some headwinds that are going to come through the data fairly soon but for now the home loans numbers are tracking a fair bit better than what we've seen in for example in building approvals," said Australian financial services firm JP Morgan economist Ben Jarman.

"First home buyers are still very soft, their representation fell again, so they're now languishing around 15 percent of new loans taken out," Jarman said.

"I think home loan demand has stabilized, and it's growing again, after a pretty weak patch that would be welcomed news," he said.

Citigroup director Paul Brennan said the figures were better than expected.

"It's the fourth straight monthly increase," Brennan said.

However, he said the positive data probably would prove temporary, as the market absorbed the November cash rate rise by the RBA.

"Our expectation is that we will see the appetite for credit weaken again in November and running off into probably early next year," he said.

The RBA left the cash rate unchanged at 4.75 percent at its December board meeting on Tuesday.

In November it raised the rate from 4.5 percent, which was the first rate rise since May.



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