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Less seeking mortgage as rates begin to bite
Stephen McMahon
December 11, 2007 12:00am
FEARS over the global economic downturn have combined with higher interest rates to soften demand for housing loans in October -- one of the first signs the Reserve Bank's monetary policy may be starting to bite.
However the Australian economy's resilience was underlined by the number of job advertisements hitting a record high of 250,000 last month, according to yesterday's ANZ survey.
Economists said high property prices are set to continue to dominate for as long as migration continues to grow, labour shortages drive up wages and tax cuts remain the government's favourite fiscal implement.
Yesterday's Australian Bureau of Statistics housing data showed an 0.7 per cent fall in the number of borrowers seeking mortgages down to 62,509 requests in October.
Citigroup economist Shane Lee said housing is "slowing modestly" after the Reserve Bank of Australia raised rates in August.
However, the latest ABS data doesn't take into account the RBA's interest rate rise to 6.75 per cent last month -- the 10th consecutive increase in five and a half years.
The Dun & Bradstreet national business expectations survey released yesterday shows the majority of executives say the global credit tightening will have a negative impact on their operations going forward.
The big four banks have already said the increased cost of borrowing may have to be passed on to households and business in the form of higher borrowing costs, irrespective of official interest rates.
Earlier this month, Adelaide Bank become the first mainstream lender to increase its lending rates above official levels in response to the soaring cost of borrowing on global credit markets.
Homeowner expectations that the RBA will increase rates to 7 per cent in February has already resulted in a sizeable increase in the number of people opting for fixed-interest loans.
The ratio of fixed rate loans jumped from 16.7 per cent in August to 21 per cent in October.
The sub-prime US mortgage crisis seems to have also resulted in a 21 per cent fall in lending levels by non-banks in the past two months.
ANZ head of Australian Economics Tony Pearson said the record high of job advertisements reflects Australia's "strong economic momentum" illustrated by annual GDP growth of 4.3 per cent.
Stephen McMahon
December 11, 2007 12:00am
FEARS over the global economic downturn have combined with higher interest rates to soften demand for housing loans in October -- one of the first signs the Reserve Bank's monetary policy may be starting to bite.
However the Australian economy's resilience was underlined by the number of job advertisements hitting a record high of 250,000 last month, according to yesterday's ANZ survey.
Economists said high property prices are set to continue to dominate for as long as migration continues to grow, labour shortages drive up wages and tax cuts remain the government's favourite fiscal implement.
Yesterday's Australian Bureau of Statistics housing data showed an 0.7 per cent fall in the number of borrowers seeking mortgages down to 62,509 requests in October.
Citigroup economist Shane Lee said housing is "slowing modestly" after the Reserve Bank of Australia raised rates in August.
However, the latest ABS data doesn't take into account the RBA's interest rate rise to 6.75 per cent last month -- the 10th consecutive increase in five and a half years.
The Dun & Bradstreet national business expectations survey released yesterday shows the majority of executives say the global credit tightening will have a negative impact on their operations going forward.
The big four banks have already said the increased cost of borrowing may have to be passed on to households and business in the form of higher borrowing costs, irrespective of official interest rates.
Earlier this month, Adelaide Bank become the first mainstream lender to increase its lending rates above official levels in response to the soaring cost of borrowing on global credit markets.
Homeowner expectations that the RBA will increase rates to 7 per cent in February has already resulted in a sizeable increase in the number of people opting for fixed-interest loans.
The ratio of fixed rate loans jumped from 16.7 per cent in August to 21 per cent in October.
The sub-prime US mortgage crisis seems to have also resulted in a 21 per cent fall in lending levels by non-banks in the past two months.
ANZ head of Australian Economics Tony Pearson said the record high of job advertisements reflects Australia's "strong economic momentum" illustrated by annual GDP growth of 4.3 per cent.
