Australian home-loan approvals unexpectedly fell in May, the first drop since February, as the highest interest rates among major developed economies discouraged investors from entering the market.
The number of loans granted to build or buy houses and apartments declined 1.2 percent from April, when they rose a revised 0.5 percent, the statistics bureau said in Sydney today. The median estimate in a Bloomberg News survey of 18 economists was for a 0.8 percent increase in approvals.
Reserve Bank of Australia Governor Glenn Stevens lowered the benchmark rate by a total of 75 basis points in May and June as weakness in Europe and China threaten the global outlook, after reducing it by 50 basis points late last year. Policy makers left borrowing costs unchanged at 3.5 percent this month, and traders are betting Stevens will resume cutting in August as industries outside of resources struggled under a high currency, prompting job losses at manufacturers and retailers.
“Stubbornly cautious consumers are proving reluctant to get into debt with heightened global uncertainty, despite 125 basis points worth of rate cuts,” Katrina Ell, an economist at Moody’s Analytics in Sydney, said before the release.
The local dollar was little changed after the report, buying $1.0186 at 11:39 a.m. in Sydney.
Today’s report showed the total value of loans fell 1.4 percent to A$20.2 billion ($20.6 billion) in May.
The value of lending to owner-occupiers gained 0.2 percent, the report showed. The value of loans to investors who plan to rent or resell homes dropped 4.6 percent.
First-home buyers accounted for 17.8 percent of dwellings that were financed in May, up from 16.8 percent in April and higher than 16.7 percent a year earlier, the report showed today.
Australian house prices dropped in the three months through March in the longest losing streak in at least a decade.
An index measuring prices for established houses in eight major cities dropped 1.1 percent last quarter from the previous three months, when it fell a revised 0.7 percent, a government report showed May 1.
Traders are pricing in a 67 percent chance the central bank will lower borrowing costs by a quarter-percentage point to 3.25 percent at its meeting next month, swaps data compiled by Bloomberg show.
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