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Posts Tagged ‘Australian Bureau of Statistics’

RBA says No Housing Crisis Here

Posted by Tamara McDowell on June 9, 2010

Speaking on recent developments in the housing market the RBA’s Head of Financial Stability, Luci Ellis recently stated that any housing collapse like that seen in the US at the start of the global financial crisis is unlikely to occur in Australia.

Ellis notes that if the current benign picture of the financing of the housing market is to continue it is crucial that lending standards in the mortgage market remain prudent.

“Past experience has clearly shown that in the long run, you don’t improve housing affordability by easing lending standards. That just gets capitalised in the price.

“In fact, easing mortgage lending standards too far can be outright damaging to long-run affordability. This has been amply demonstrated in the recent United States housing meltdown,” Ellis said.

In Australia, lending standards never eased that far, and conditions didn’t get that grim.

Ellis notes that first-home buyers have long faced greater risk than more established home owners who have more equity in their homes. She states that there appears to have not been a drop in lending standards to first-time buyers, even when the First Home Owners Boost was in effect.

“Indeed, across the mortgage market as a whole, lending standards are a little tighter than they were a couple of years ago,” says Ellis.

In summary Ellis said that the global economic slump may still have a way to go and with consumer confidence still low financial conditions could remain tight for several years.

Mortgage holders should expect then, that current lending criteria will remain in force – which generally means borrowers will be required to provide a minimum deposit of  5 per cent as well as provide evidence that genuine savings forms part of that deposit.

Borrowers who require assistance finding a home loan, or who are looking for a low deposit option, should talk to a good mortgage broker for assistance.

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Posted in Bank & Lender News, House Prices, Interest Rates, Loans, Mortgage Broker Service, Real Estate News | Tagged: , , , , , , , , | Leave a Comment »

Home loan demand falls for fifth month

Posted by Tamara McDowell on April 13, 2010

The Reserve Bank of Australia (RBA) will raise the cash rate one more time before giving borrowers a long reprieve, economists say, after new data showing that housing finance commitments fell for the fifth straight month in February.

Australian housing finance commitments for owner-occupied housing fell 1.8 per cent in February, seasonally adjusted, to 50,287, the Australian Bureau of Statistics said on Monday.

It was below market forecast of a 1.0 per cent fall in the month and was the fifth straight month of decline.

ICAP economist Adam Carr said the lending data would concern the RBA, causing the Bank to reassess the pace of future interest rate rises.

“It’s pointing to a sharp, broad-based decline in lending activity,” Mr Carr said.

“That would suggest to me that we’re getting to the point where the pace of rate hikes will slow, markedly.

“The RBA will only hike once more and then ease off.”

The central bank has lifted the cash rate five times in the past seven months.

The current interest rate is 4.25 per cent.

Meanwhile, RBA assistant governor Guy Debelle told a Senate committee in Sydney the central bank isn’t trying to suppress demand by raising interest rates.

“We’re trying to ensure growth is at a sustainable pace,” he was reported by Bloomberg to have told the Senate Inquiry into Access of Small Business Finance.

Mr Carr said Monday’s ABS data showed activity already was being dampened.

“It’s already happening,” he said.

“So I would imagine that there’s not a lot left in the tightening cycle in the near term at least.”

He could not predict whether the bank would next raise the rate in May or June, however. Read the rest of this entry »

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