THE number of home loans for owner occupied housing rose for the first time in eight months in May, official figures show. While the headline figure masks a slowing economy, it could mean borrowers will be spared another rate rise until the end of the year, economists say.
Australian housing finance commitments for owner-occupied housing rose 1.9 per cent in May, seasonally adjusted, to 48,818, the Australian Bureau of Statistics said on Monday. It was the first rise in the headline figure since September 2009 and it beat market expectations for a rise of 1.0 per cent in the month.
CommSec chief economist Craig James said the headline figure masked signs of a slowing economy. “The number of home loans taken out is the lowest in nine years,” he said.
“That suggests a significant softening in demand for home loans. “This is what the RBA (Reserve Bank of Australia) wanted, to slow the economy down to a more sustainable level.”
The RBA took the cash rate from three to 4.5 per cent in six moves between October last year and May. The central bank held the cash rate steady at its June and July board meetings. Mr James said he did not expect the Bank to raise the cash rate agin until late 2010. “We’re still penciling in a rate hike by the end of the year,” he said.
Total housing finance by value rose by 0.7 per cent in May, seasonally adjusted, to $21.360 billion, the ABS data showed.