May 13 (Bloomberg) -- Australian home-loan approvals rose the most in four years in March as central bank interest-rate cuts lured buyers into the market.
The number of loans granted to build or buy houses and apartments advanced 5.2 percent from February, when they rose a revised 2.1 percent, the statistics bureau said in Sydney today. The median estimate in a Bloomberg News survey of 16 economists was for approvals to rise 4 percent.
Governor Glenn Stevens and his board reduced the overnight cash-rate target to a record-low 2.75 percent last week as a benign inflation outlook gives him scope to boost industries including construction to rebalance growth away from resource investment. The RBA said there are signs the shift is occurring, while warning low rates threaten to ignite housing prices.
“A key risk is that established dwelling prices rise more quickly than assumed,” the central bank said in its quarterly monetary policy statement released May 10, noting they have risen about 4 percent from their 2012 lows. “The associated boost to wealth and sentiment could in time generate stronger-than-expected consumption growth. If this were accompanied by a return to increasing household leverage, it would raise concerns from a financial stability perspective.”
The Australian dollar was little changed at 99.84 U.S. cents after today’s data. Traders are pricing in a 26 percent chance the central bank will lower rates to 2.5 percent next month, swaps data compiled by Bloomberg show.
The total value of loans climbed 4.5 percent to A$23 billion ($23 billion) in March, today’s report showed.
The value of lending to owner-occupiers increased 5.8 percent, the report showed. The value of loans to investors who plan to rent or resell homes rose 2.1 percent.
Today’s report showed first-home buyers made up 14.2 percent of the loans approved in March, from 14.4 percent in February.
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