The Housing Industry Association believes that the decision by the major banks to increase variable interest rates on home loans outside of rate increases by the RBA, will ultimately hurt the Australian housing industry as First Home Buyers will loses confidence.
According to the latest statistics on Home Loans for December 2011, the November and December official interest rate cuts had a positive impact on home buyer confidence and new home loan applications.
“The 2.1 per cent increase in new home loan numbers in the month of December 2011 demonstrates the potential of a revival in the lending market should the RBA and the banks wish to see one.
If the banks begin to act independently of the RBA they can potentially do significant damage to the homed buyer confidence affecting both the activity in the property market and demand for home loans.
There was also improvement in lending for established homes in December, with the number of home loans up by 2.3 per cent, demonstrating how a reduction in interest rates affects borrower demand and home buyer confidence.
The recovery in the aggregate number of home loans for first time buyers also took place, with First time buyer home loans comprising 20.9 per cent of all properties financed in December 2011, which compares to 16.9 per cent one year earlier.