Housing finance figures points to fragility of economy

With home loan approvals falling once more, 1300HomeLoan said that this is yet another sign of the economy's fragility and the requirement for the Reserve Bank to hold interest rates.

Seasonally adjusted, the Australian Bureau of Statistics saw the number of home loan approvals in January fall 0.4%, and a 1.9% drop in December.

Managing director of 1300HomeLoan, John Kolenda, said that talk of a surging economy is coming off the mark and that any early increase of interest rates will see consumer sentiment rush towards conservatism.

“Demand for home loans remains flat and the longer the RBA maintains its cash rate at the record low of 2.5% the better as this has at least provided much needed stability for consumers,” Kolenda said.

“Unemployment also is likely to rise with many companies forced to make job cuts. The retail sector is still not showing sustained improvement, while the resources sector continues to slow," he said.

“Creating a more positive consumer sentiment has taken numerous rate decreases over the past few years. Pulling the trigger too quickly could have serious consequences for consumer confidence.”