Home building recovery could affect demand for home loans

Thursday 17 December 2009

Article by Mozo

Home building starts in the September quarter rose by 9.4 per cent to 34,082 units, up from 31,154 units in the June quarter, the Australian Bureau of Statistics has said.

National Australia Bank senior economist David de Garis told the Australian Associated Press (AAP) that the growth was due to federal government stimulus measures and low interest rates earlier in the year.

"Private commencements rose 8.1 per cent while public housing commencements jumped 44.5 per cent, with the up-lift in public housing activity benefiting from fiscal largesse, just as the boost to the first homeowner’s grant and low mortgage rates kick-started new private housing demand," Mr de Garis told the news provider.

Government homeowner grants have been a further issue for bank customers to consider should they compare home loans.

In October 2008, the government tripled the first homeowner’s grant to $21,000 for new dwellings until September 30th this year, ahead of a phasing out of the initiative by January 1, 2010, the AAP said.

A recent study by the Market Intelligence Strategy Centre found that the value of new home loans in the coming year was set to fall as a result of rising interest rates following the RBA’s recent decision to lift the cash rate to 3.75 per cent.

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