The escalating interest rates in Australia may have discouraged clients from applying for mortgages, as data released by the Australian Bureau of Statistics (ABS) indicated a drop in housing finance in March.
Data from ABS showed that seasonally adjusted value of owner occupied housing commitments in Australia fell 3.7 percent.
The data also showed that finance commitments for owner-occupied housing dropped to $13.5 billion in March, compared with $14 billion in February.
The value of total personal finance commitments recorded a seasonally adjusted decline of 1.3 percent, while fixed lending commitments dropped 1.1 percent and revolving credit commitments decreased 1.3 percent.
In early-May, the Reserve Bank of Australia (RBA) raised its cash rate by 4.5 percent for three straight months and the sixth increase since October.
Many economists warned that there will be more interest rate increases in coming days.
According to Access Economics, homebuyers should expect three more interest rate hikes this year, which will take the official cash rate between 5.25 percent and six percent by end-2010.
Several experts expect interest rate increases to slow down the housing market’s activities. Louis Christopher, MD of SQM Research expressed that "there will be a slower housing market in Sydney in the second half of this year, even with a normal economy.”