Home loan approvals in Australia dropped in April for the seventh consecutive month, adding to evidence that the Group of 20’s most aggressive series of interest rate increases has eased demand among first-time homebuyers.
The number of approved loans to build or purchase homes and apartments fell 1.8 percent to 47,669 from March, down from a revised 2.9 percent, according to the statistics bureau in Sydney. Declining home finance approvals may cool the country’s property market, which increased 20 percent in a year through March 31.
The report may prompt Glenn Stevens, the central bank governor, to keep the benchmark interest rate unchanged in July for a second month, after increasing the rate six times between October last year to May 2010. Mr. Stevens described monetary policy as “appropriate for the near term”.
“Housing finance demand has moderated considerably,” said Bill Evans, chief economist at Sydney’s Westpac Banking Corp. “Finance to first home buyers has retreated sharply.”
Borrowing has fallen since Q4, after the Australian government began reducing A$21,000 (S$24,425) grants to first-time homebuyers of newly built homes, which were again lowered to A$7,000 on Jan 1.
According to the statistics bureau, about 16.3 percent of first-time homebuyers were funded in April, up from 15.9 percent in March and 28.1 percent in April last year.
Mr. Stevens, along with his board, increased the country’s overnight cash rate target by 150 basis points to 4.5 percent between October and May. These increases have led to stability in Australia’s economy, stirred by a rebound in the property market and government stimulus spending.