Improved housing market conditions evident: RBA

Improved housing market conditions evident: RBA
Improved housing market conditions evident: RBA

Although housing credit growth declined further in June, approvals for new loans increased, the Reserve Bank of Australia has noted.

This increase in approvals was broadly based, across owner-occupiers and investors, across states and across different types of lenders.

The RBA noted it was also consistent with the improved conditions in housing markets evident in a range of indicators, such as auction clearance rates and housing price growth, particularly in New South Wales and Victoria.

"If housing conditions continue to improve in the coming months, we would expect to see a further rise in loan approvals," Christopher Kent, the assistant governor (Financial Markets) said in an address to the Finance & Treasury Association this morning.

Kent noted lenders have passed through most of the cash rate reductions to housing interest rates.

"Following the 50 basis point reduction in the cash rate from June to July, lenders lowered their standard variable rates (SVRs) on housing loans by an average of 44 basis points.

"The extent of pass-through was broadly consistent with the experience of the past decade."

Kent further noted the average interest rate actually paid on outstanding variable-rate housing loans in the Reserve Bank's Securitisation Dataset decreased by 23 basis points in June, the same as the average announced reduction in SVRs.

"Similar reductions in outstanding rates are expected to be recorded for July data.

"So the declines in SVRs are being pushed through to all existing borrowers, which make up the so called ‘back book’. Rates on new loans have also been lowered.

"Indeed, new borrowers, and those refinancing existing loans, continue to be offered interest rates that are on average well below those applying to existing loans.

"So customers who are actively looking around at what's on offer, are able to take advantage of the strong competition among lenders that is focused squarely on the ‘front book’."

Tags: 
Mortgages

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