Home loan surge shows lure of low rates
Home loan surge shows lure of low rates

A rise in monthly home loan data shows Australians are beginning to take advantage of interest rate cuts.

The number of home loans approved in September rose 0.9 per cent to 46,395, up from an upwardly revised 45,983 in August, according to official data.

Economists had expected housing finance commitments to rise 1 per cent in September.

Total housing finance by value rose 3.8 per cent in September, seasonally adjusted, to $21.203 billion, according to the Australian Bureau of Statistics.

CommSec chief economist Craig James said the data suggested home loan value could be on the rise.

"The data shows that loan value is rising at a faster rate than the actual number of loans," he said.

"That suggests that there's increased confidence by borrowers, or that home prices are edging a little higher."

The result could be an indication that consumers were beginning to feel the impact of rate cuts from the Reserve Bank of Australia in previous months.

"There's a solid increase in the value of loans," Mr James said.

"It's what you would expect after a couple of rate cuts in the middle of the year.

The RBA cut the cash rate by half a percentage point in May, followed by a quarter of a percentage point each in June and October, bringing it to 3.25 per cent.

St George chief economist Hans Kunnen said the relative strength of the housing data meant the RBA was less likely to cut the cash rate in December.

"If they didn't cut in November and they get a result like this now you would have to think, well why would you (cut the cash rate) when things are on the pick up?"

"This result in itself would lean towards the RBA saying: we'll leave rates where they are because the past cuts seem to be working."

Despite a drop in construction of new dwellings, Mr Kunnen said the housing data suggested the troubled housing sector was starting to pick up.

"When you see investors involved and when you see lending for new homes picking up, you start to get the inkling that people are starting to overcome their conservatism and are thankful for the cut in rate that the Reserve Bank has done,â€

The West Australian

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