Leading mortgage broker Loan Market has reported a steep decline in home loan approvals as a result of rising official interest rates.
Loan Market Chief Operating Officer Dean Rushton said the company’s home loan approvals were down 15 per cent in the first quarter of 2010 compared to the December quarter of 2009.
Mr Rushton said home loan approvals to first home buyers were down 40 per cent over the same period.
He said the Reserve Bank of Australia (RBA) lifting the cash rate five times since last October to 4.25 per cent had resulted in a significant drop off in demand for housing finance.
“The RBA’s interest rate strategy has certainly had an impact on the home finance sector,” Mr Rushton said.
“There’s a strong possibility of another 0.25 per cent rise from the RBA next week but the mortgage broking industry and particularly homebuyers would like to see the central bank leave things alone for a while.
“The RBA could be punishing a lot of people unnecessarily.
“We would be very concerned if the RBA continued moving the cash rate back to pre-global financial crisis levels of around 7.0 per cent as our own surveys have found mortgage holders are carrying significant debt levels.”
Mr Rushton said official Australian Bureau of Statistics figures for home lending had also reported three successive months of decline up until February this year.
He said the end of the expanded first home buyers grant scheme from the start of this year had put off a lot of people considering entering the property market.
Source: Loan Market
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