(Updates with comment from economist in fourth paragraph.)
Jan. 16 (Bloomberg) -- Australian home-loan approvals rose in November for an eighth straight month as buyers responded to the central bank’s first interest-rate reduction in two years.
The number of loans granted to build or buy houses and apartments gained 1.4 percent from October, when they rose a revised 0.8 percent, the statistics bureau said in Sydney today. The median estimate in a Bloomberg News survey of 19 economists was for a 1 percent increase in approvals.
Reserve Bank of Australia Governor Glenn Stevens lowered the benchmark rate by a quarter percentage point on Nov. 1 and Dec. 6 as Europe’s debt crisis dimmed prospects for global growth. The first rate cuts since 2009 were aimed at buttressing the housing market, supporting employment and boosting confidence among consumers who are saving more.
“Mortgage rates in Australia are quite low and the RBA’s 50 basis-point rate cut should offer further support to loan growth over coming months,” Adam Carr, a senior economist in Sydney at ICAP Australia Ltd., a unit of the world’s biggest interdealer broker, said before today’s report.
The nation’s four largest banks -- Commonwealth Bank of Australia, Australia & New Zealand Banking Group Ltd., Westpac Banking Corp. and National Australia Bank Ltd. -- reduced home- loan rates for customers after both RBA moves.
Stevens lowered the overnight cash rate target to 4.25 percent from 4.5 percent on Dec. 6, citing “considerable turbulence” in financial markets and an increased chance of a “further material slowing in global growth.”
Traders are betting Stevens is likely to lower borrowing costs again at the central bank’s next meeting in February, interbank cash-rate futures showed before today’s report.
The data showed the total value of loans rose 2.1 percent to A$20.3 billion ($20.9 billion) in November.
The value of lending to owner-occupiers gained 2.2 percent, the report showed. The value of loans to investors who plan to rent or resell homes advanced 1.8 percent.
First-home buyers accounted for 20 percent of dwellings financed in November, up from 19.1 percent in October and higher than 16.7 percent a year earlier, the report showed today.
The RBA said in a quarterly statement on Nov. 4 laying out its economic growth and inflation forecasts that Australia’s housing market “remains weak.”
“The stock of unsold homes has not declined significantly and housing construction activity continues to be at very low levels,” the central bank said in the statement on monetary policy. “Population growth is, however, gradually reducing the underlying surplus of houses and there are some signs that house prices have stabilized, particularly in those areas that were less affected by overbuilding in the mid-2000s.”
--With assistance from Daniel Petrie in Sydney. Editors: Brendan Murray, Malcolm Scott
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