The CEO of Australia’s largest independently-owned mortgage broker, Mortgage Choice, says the latest ABS housing finance data highlights that warnings of interest rate rises are having a dampening effect on home loan demand.
The August ABS Housing Finance report shows a reduction in both the number and value of housing finance for investment housing, while the value remained steady for owner occupied housing finance.
The total value of dwelling commitments dropped 1.3% from July to August 2010. The number of owner occupied loans increased 1.0% and the number of loans for the purchase of established dwellings increased 1.4%.
However, the number of loans for the purchase of new dwellings dropped 2.0% and the number of loans for the construction of dwellings dropped 1.0%.
Mortgage Choice CEO Michael Russell says: “It is no secret that winter delivered a slowed pace for housing finance demand, particularly from investors.”
“There is no doubt the Reserve Bank’s hold on the cash rate will shortly come to an end. What is just as worrying for potential and existing borrowers is how lenders will react to the news.
Russell adds: “Some good news is that we have witnessed a dozen or so lenders announce product changes over the past couple of months. In a further sign that lender competition for home loans is rapidly returning, some lenders are offering special discounted interest rates and higher loan to value ratios."
