Mortgage lending growth in Australia fell to a record low, indicating that the central bank’s interest rate cuts are not really encouraging homeowners to take out more loans, the Property Observer reported.
According to data from the Reserve Bank of Australia (RBA), housing credit rose by just 0.4 percent in September, following a rise of 0.3 percent in August.
Compared to September 2011, growth was only 4.7 percent which is a new historical low since 1976. The previous low was an annual growth rate of 4.8 percent in August 2012.
Since the central bank started slashing the cash rate in November 2011, annualised mortgage lending growth dropped to 4.7 percent from 5.6 percent. In comparison, annual mortgage lending growth averaged between 15 and 22 percent during the last housing boom which lasted from 2000 to 2004.
Figures also revealed low credit growth in other sectors. This indicates that businesses and consumers are cautious and are unwilling to take on more debt.
Nonetheless, the RBA’s interest rate cuts are helping to “accelerate repayment of debt”, said Ian Narev, Commonwealth Bank’s Chief at the company’s recent AGM.
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