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05:32:03 pm

August Home Lending Figures Are Out, And All Looks Safe On The Housing Bubble Front

Australian Home Loan Approvals Beat Expectations, AUD/USD Lower

The total number of new loans fell 3.9%, against market expectations of a 2.5% fall. By value, owner-occupied home loans fell 1.9% to a seasonally adjusted $15 billion, while investment loans held steady at $8.8 billion. For monetary policy however it is trends that matter most. On that front, signs are positive: overall housing finance is trending up 0.5%, with owner-occupied home loans up 0.4% and investment loans up 0.8%. None of this data should alarm anyone who is concerned about a housing bubble. Chances of a growing debt-fuelled bubble are remote at best, with borrowing fairly stable and the proportion of first home owners who usually have more leverage falling. The RBA has its eye on housing but for the moment, its far from frothy. Follow Greg McKenna on Twitter.
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Markets closed Australian Home Loan Approvals Beat Expectations, AUD/USD Lower By Jimmy Yang | DailyFX Tue, Aug 6, 2013 10:00 PM EDT 0.9675 +0.0008 THE TAKEAWAY: Australian home loan approvals increase in June while investment lending declines > Market likely waiting for more data this week > AUD/USD Lower The Australian Dollar traded lower against the US Dollar as data showed increased demand for housing in Australia. Home loan approvals grew 2.7 percent month-over-month in June, up from May s revised-down 1.7 percent, to beat expectations for growth of 2.0 percent. The value of these loans also grew 2.1 percent as hinted by rising house prices . However, investment lending declined the first time this year with a reading of -0.5 percent. This joins yesterdays construction data release in offering the first snapshots of the Australian economy after the Reserve Bank of Australia lowered its benchmark interest rate from 2.75 to 2.5 percent . Although these data report on a time period before the centrals banks decision, they offer investors guidance on their expectations for future policy. At the meeting, the RBA maintained its outlook for a sluggish economy but removed rhetoric pointing to inflation in supporting scope for further easing. As such, investors will likely look towards domestic as well as overseas developments in its largest trading partner and to gauge the health of the Australian economy and guide their speculations for RBA policy. Currently, Credit Suisse swaps are pricing in market expectations for another 25BP rate cut sometime in the next 12 months. Furthermore, expectations for Federal Reserve policy will continue to drive the pair.
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