An eight-month low in lending finance approvals recorded in the month of October will have no more bearing on the interest rate outlook than the 18-month high recorded a month earlier.

The total value of finance commitments fell by 9.7 per cent in October to $50.766 billion, seasonally adjusted, from $56.208 billion in September, data from the Australian Bureau of Statistics (ABS) on Monday showed.

Within the total, commitments for housing finance, including alterations and additions, fell by 1.7 per cent while, other personal finance was down by 1.5 per cent, however the overall fall was dominated by commercial finance, which recorded a 16.3 per cent drop.

It is tempting to try to attribute these movements to some underlying economic cause, but the volatility of this series warns against that.
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Reserve Bank of Australia (RBA) deputy governor Ric Battellino says fears about Chinese investment are overblown.

He says that while China has figured prominently in the public consciousness regarding foreign investment, it accounts for but a tiny fraction of foreign capital invested in Australia.

“Australian Bureau of Statistics (ABS) data indicate that, at the end of 2008, Australian assets owned by Chinese entities stood at around $8 billion,” he said.

“This is less than half of one per cent of total foreign investment in Australia, and puts China a long way down the list in terms of importance as a source of investment,” Mr Battellino said in a statement.

Mr Battellino told the 3rd Annual Australian Parliamentary Conference in Perth that, from China’s perspective, Australia accounts for an even smaller share of its total offshore investment less than one quarter of one per cent.
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First home buyers now comprise a record proportion of the residential housing market after responding to low interest rates and the government’s revamped assistance package, economists say.

First home buyers made up 27.5 per cent of all home loans in March, a record since the Australian Bureau of Statistics (ABS) began the data series in 1991, and compared with 26.5 per cent of the total market in February.

The ABS data also showed that the housing market has recovered to its February 2008 levels, when interest rates were still being raised by the Reserve Bank of Australia (RBA) before a series of monthly cuts since September to a 49-year low last month.

The number of home loans for owner-occupied housing jumped to a 13-month high of 59,793 in March.
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The Reserve Bank of Australia (RBA) cut interest rates earlier this month after it realised the outlook for economic growth was even worse than expected.

In the minutes of the April 7 board meeting, released on Tuesday, the RBA acknowledged the economic slowdown had probably met the conventional benchmark for recession - two consecutive quarters of declining gross domestic product (GDP).

“The latest set of indicators suggested that GDP was likely to have fallen again in the March quarter,” the RBA said in the minutes.
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In encouraging signs for the housing market, first home owners are returning and according to the Mortgage and Finance Association of Australia (MFAA), it is a trend that will continue over the coming 12 months as housing prices continue to cool.

According to the latest Housing Finance statistics released today by the Australian Bureau of Statistics, first time buyers securing loans (as percentage of total owner occupied housing finance commitments) increased from 19.5 per cent to 23.6 per cent.
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Further interest rate cuts and falling petrol petrol prices should help kick-start a weak market for lending finance, an economist says.

The value of personal and commercial commitments fell in October, Australian Bureau of Statistics (ABS) figures issued on Monday show.

Lending for personal purposes fell 2.1 per cent in October, while commercial financing was three per cent lower for the month.
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The highest underlying inflation rate in 17 years will not deter the Reserve Bank of Australia (RBA) from cutting interest rates several more times to ward off an economic slowdown, economists say.

Underlying inflation - the average of the RBA’s preferred measures and the number the central bank focuses on in its monetary policy deliberations - surged in the year to September by the fastest annual pace since mid-1991, when Australia was in recession.
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The nation’s peak union body has urged banks to show some restraint with mortgage rates, saying inflation data out today is further evidence families are under significant financial stress.
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Australian lending finance has posted its biggest annual fall in 16 years as slumping consumer sentiment wards off business borrowing.

Total lending finance - which includes personal, housing, commercial and lease borrowing - slumped by a seasonally adjusted 13.3 per cent in the year to May, the Australian Bureau of Statistics said today.
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Just 52,006 people took out a new mortgage in May - the lowest number since October 2004 - as 12-year high interest rates continued to dampen the desire for home ownership.
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‘Renters and buyers are feeling the fallout from consecutive interest rate rises,’ says Noel Dyett, President of the Real Estate Institute of Australia (REIA). ‘The Deposit Power/REIA March quarter 2008 Housing Affordability Report shows a deterioration in both rental and home loan affordability across Australia.’ Full Story

Homebuyers are turning away from fixed-rate home loans as economists forecast interest rate cuts next year, a mortgage broking group says.

Fixed-rate home loans were snapped up by one in three borrowers in March, data from Mortgage Choice showed.

The figure was lower than February’s 37 per cent take-up and below the six-month average of 36 per cent when about 3,500 loans from 25 lenders was analysed.

Standard variable loans made up 36 per cent of mortgages in March while basic variable loans, where consumers are more restricted in their repayment options, made up 17 per cent.

Another 13 per cent opted for a credit card mortgage, while a small proportion of borrowers chose non-conforming and reverse loans.

Mortgage Choice spokeswoman Kristy Sheppard said borrowers were switching away from fixed interest loans because they were less concerned about rising interest rates and did not expect the Reserve Bank of Australia (RBA) to hike rates again in May.

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