Home loan uptake falls in May, says ABS
The Australian Bureau of Statistics (ABS) has confirmed the number of people securing home loans across the country fell in May.
Mortgage uptake was down by 1.2 per cent during the month when compared to April 2012 and this has surprised many economists.
The Reserve Bank of Australia (RBA) slashed the national cash rate by 50 points at the start of May, but it seems to have had little effect on encouraging people to get a foot on to the property ladder.
It followed this up with another 25-point reduction in June and it will be interesting to see if this had any impact at all.
One person who was not shocked by the results was Commonwealth Bank senior economist Michael Workman, who said it normally takes a few months before interest rate cuts have any effect on the property market.
In many cases, banks and lenders were reluctant to pass the savings on to their customers, so a lot of mortgage holders will be paying interest that is far higher than the 3.5 per cent national cash rate.
"Usually it takes a little while for people to get organised and do something about it," he remarked.
"You'd expect to see a pick-up in lending in August or September, particularly if we get another interest rate cut next month," Mr Workman added.
The economist also stated that a lot of first-time buyers could be waiting for the right moment before they enter the market. With average property values falling in recent years, Mr Workman feels that a lot of potential buyers are hanging on for as long as possible to see if prices dip any further.
However, it would be wrong to suggest that the recent interest rate reductions have not been welcomed by homeowners.
Commonwealth Bank's home loans general manager Clive Van Horen told National Features earlier this week that existing mortgage customers have been using the cuts to repay their debt at a faster rate.
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