Home Loans Post Best Gain in Seven Months
Home loans have posted the best gain in seven months, with the number of home loan borrowers increasing to a seven-month high, more borrowers are also opting to have fixed home loans. In the month of October, there were 49,307 mortgage applications this is a 1.9 percent seasonally-adjusted increase when compared to the numbers in September. This jump is way beyond the 0.3 percent increase that was predicted by economists.
Out of the total number of mortgages taken in October, 6.9 percent are fixed home loans. This figure is close to three percent better than the 4.4 percent fixed home loan proportion in September. The almost seven percent total in October is the biggest proportion of fixed home loans in a month since July 2009.
However, these numbers came in a time before the Reserve Bank of Australia lifted the official cash rate by 25 basis points to 4.75 percent. In reaction to the RBA’s increase on Melbourne Cup Day, the major Australian banks increased their interest rates beyond 25 basis points. After the cash rate increase and the interest rate increases by the big banks, economists predict that the percentage of fixed home loans will increase further.
First time home buyers are not confident in entering the property market, only making up about 15 percent of all the home loans approved in October. This percentage is the smallest number of first time home buyers since July 2004 and it may drop further when the figures for November are released.
However, the RBA did not move the 4.75 percent official cash rate in their board meeting this month and the cash rate will stay put for two more months as the RBA board will not meet until February 2011
