Home loan demand falls in the wake of rising rates

The number of home loans issued by Australian banks is falling as a result of rising mortgage interest rates and the reduction of government stimulus measures.

Australian Bureau of Statistics data shows a 5.6 per cent fall in the number of home loans issued in November. In all, housing finance for owner occupation fell 2.9 per cent to $16.537 billion in November from $17.036 billion in October.

CommSec economist Savanth Sebastian told the Australian Associated Press that such a fall was inevitable in light of the difficult borrowing conditions at present.

"It’s ironic that, over the past year, what supported lending finance was housing, which has now contracted, largely due to the fact that we’ve had rate hikes and the expiry of the first home owners boost," he added.

Mr Sebastian also said that the Reserve Bank is likely to raise interest rates in February for the fourth consecutive month – a prediction that may encourage borrowers to compare home loans as Aussies struggle to secure home financing.

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