Mortgage approvals in Australia have declined for two straight months, resulting in more pressure on the central bank to slash interest rates as consumer confidence weakens.
According to data released by the Australian Bureau of Statistics, the number of home loans approved for building and purchasing fell 2.5 percent in February, the highest drop since March 2011.
While the Reserve Bank of Australia (RBA) said it will maintain the cash rate of 4.25, Glenn Stevens, Governor of the RBA said there may be a cut in May.
The central bank had previously lowered its borrowing costs to 4.25 percent to ease housing woes, boost consumer confidence and support jobs.
“The data falls on the side of the ledger that suggests there is scope for the RBA to lower rates further and lend some support to the sectors,” said Su-Ling Ong, a senior economist at RBC Capital Markets.
She is expecting a slash in the cash rate by May and another one in September as long as inflation remains subdued.
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