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Australia July Home-Loan Approvals Climb, Boosting Case for Rate Increase
Australian home-loan approvals rose in July, increasing the central bank’s scope to resume interest- rate increases in coming quarters.
The number of loans granted to build or buy houses and apartments gained 1.7 percent to 47,511 from June, when they fell a revised 3.2 percent, the statistics bureau said in Sydney today. The median estimate of 20 economists surveyed by Bloomberg News was for a 1 percent increase in approvals.
A rebound in demand for home loans, which tumbled for seven straight months through April as the central bank embarked on the most aggressive round of interest rate increases by a Group of 20 member, may help economic growth in the second half. Reserve Bank of Australia Governor Glenn Stevens yesterday extended a pause in raising rates “for the time being.”
“Housing finance is finding a base after the downturn from last October in response to the RBA normalizing interest rates,” said Bill Evans, chief economist at Westpac Banking Corp. in Sydney. “We anticipate an improvement in coming months with the RBA now on hold and with household incomes boosted by labor market strength.”
Local Dollar
The Australian dollar was little changed at 91.19 U.S. cents at 12:04 p.m. in Sydney from 91.13 cents just before the report was released. The two-year government bond yield was unchanged at 4.43 percent.
A report tomorrow may show employers added 25,000 workers in August, the 11th month of gains in the past year, reducing the nation’s jobless rate to 5.2 percent from 5.3 percent in July, according to analysts surveyed by Bloomberg News. The nation’s jobless rate is almost half the level of the U.S.
The total value of loans rose 0.7 percent to A$20.9 billion ($19 billion) in July, today’s report showed.
The value of lending to owner-occupiers advanced 2.3 percent. The value of loans to investors who plan to rent or resell homes dropped 2.3 percent.
Signs that Australia’s economic expansion isn’t stoking inflation and concern about potential fallout from slower U.S. growth were among reasons the central bank left the benchmark lending rate unchanged yesterday at 4.5 percent for a fourth straight month.
“With growth in the near term likely to be close to trend, inflation close to target and with the global outlook remaining somewhat uncertain, the board judged this setting of monetary policy to be appropriate for the time being,” Stevens said yesterday.
The drop in borrowing accelerated after the start of last year’s fourth quarter as the government began reducing A$21,000 grants to first-time buyers of newly built dwellings. Those grants were lowered in two steps to A$7,000 by Jan. 1.
First-home buyers accounted for 16.1 percent of dwellings that were financed in July, up from 16 percent in June and down from 25.3 percent a year earlier, the statistics bureau said today.
To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net
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