Mortgage lending in Australia remains weak despite the monthly increases, giving room for the central bank to keep interest rates on hold, said some economists.
Mortgage commitments for owner-occupied housing jumped more than 1.7 percent in July from the preceding month, according to figures released by the Australian Bureau of Statistics (ABS). However, this was 25 percent lower compared to July 2009.
Savanth Sebastian, an economist from CommSec, said the July increase in home loan commitments was effectively a “drop in the ocean”, given the decline in housing finance over the past few years.
“We’re coming off really what has been nine-year lows in terms of housing finance, so it’s heartening to see at least it’s travelling back up in the right direction,” said Mr. Sebastian. “But you really wouldn’t say that it’s anything too dramatic.”
The total value of housing finance increased 0.7 percent in July, seasonally adjusted, to $20.854 billion.
Mr. Sebastian noted that a 2.3 percent decline in investment housing was due to the recent remarks regarding property prices “going sideways” for a while.
“Investors now have the opportunity to pick and choose rather than having to rush into the marketplace and that’s probably one of the reasons why you’ve seen that fall in investor housing,” he said.
The data released by ABS showed the proportion of total mortgage commitments taken out at fixed rates jumped 4.0 percent in July from 3.4 percent in June.
Stephen Roberts, chief economist at Nomura Australia, said the data indicated a “rekindling” in the housing market. He added that the “decline in the demand for first home buyers is coming to an end.”