Home loan approvals rise above expectations
The demand as well as approvals for home loans have been rising despite contrary expectations with record-low interest rates supporting the housing market. According to data from the Australian Bureau of Statistics, approvals rose 1% over the month of April, with 53,951 home loans approved over the course of the month, up from 53,442 in March.
According to news.com.au, a strong lift in lending for the construction of dwellings, up 4.3% in April, was particularly pleasing, said CommSec chief economist Craig James.
"If we are going to get home prices down to more sustainable levels then you need more supply on the market, and clearly there's people wanting to build new homes to live in, rather than investment," he said.
Rising demand for new homes could take some of the heat out of the Sydney and Melbourne property markets, Mr James said.
Earlier this year, the Reserve Bank of Australia slashed the cash rate to 2.25% in February. Another cash cut followed after the RBA’s board meeting in May when rate came further down to 2%.