Fed: Home borrowing falters for second straight month

AAP General News (Australia)
08-09-2004
Fed: Home borrowing falters for second straight month

CANBERRA, July 9 AAP - Home borrowing has dropped for the second month in a row in
a further sign that interest rates are likely to be stuck on hold for several more months.

The Australian Bureau of Statistics (ABS) said the value of new home loans fell 4.7
per cent in June, more than economists had expected.

The number of new loans to owner-occupiers fell 3.3 per cent to hit a fresh three-year
low, allowing for seasonal influences.

The falls will reassure the Reserve Bank, which has been worried about skyrocketing
household debt, that the heat is coming out of the housing market after signs of a recovery
earlier in the year.

The central bank left interest rates on hold last week for the eighth month in a row
after back-to-back rises late last year, although rates are still regarded as slightly
below normal.

The ABS said the value of all housing loans approved in the month fell to $14.78 billion,
with owner-occupiers making up $9.63 billion of the total.

Loans to investors plunged 8.8 per cent, although there was a rise in borrowing to
build investment properties.

And in a sign that steadier prices may be encouraging first-time buyers back into the
market, the share of first home buyers rose for the third month in a row to 14.4 per cent.

The value of the average loan fell for the first time in four months to $202,700.

AAP kmh/sb/tnf

KEYWORD: HOUSING

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