First homebuyers back in the property market

By staff writers and wires
September 10, 2007
Article from AAP

THE number of first homebuyers rose in July ahead of the spring property season though home lending fell given an expected rise in interest rates in August.

Some 63,599 people took out a home loan in July prior to last month's interest rates rise, fewer than those who took the plunge into home ownership in June.

The number of housing finance commitments for owner occupiers fell by a seasonally adjusted 4.1 per cent in July, with loans totalling $15.1 billion, according to data released by the Australian Bureau of Statistics.

Economists had expected a 2 per cent fall in July, with some having anticipated people switching into superannuation investment rather than moving into housing following the Government's super changes that commenced on July 1.


Value of lending drops

The value of home loans fell by 7.4 per cent, seasonally adjusted, in July, after a 9.6 per cent increase in June.

Within the total, loans to investors fell 6.8 per cent after a 13.8 per cent surge, while loans for those buying their own homes fell 7.7 per cent after a 7.7 per cent rise.

But the number of first home buyer commitments as a percentage of total owner-occupied housing finance commitments rose to 17.4 per cent in July 2007 from 16.7 per cent in June 2007.

Lending to soften

Economists expect home lending will take a further downturn in the coming months following the August rise in interest rates and with discount deals on mortgage deals likely to have been reduced, or even eliminated, because of the global turbulence in credit markets.

The Reserve Bank of Australia raised interest rates in August following a renewed spike in consumer prices, and recent data suggests there is a risk of a further move later this year if inflation data on October 24 shows lingering price pressures.

The number of fixed rate loan commitments as a percentage of total owner occupied housing finance commitments fell to 14.8 per cent in July 2007 from 17.0 per cent in June 2007.