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12:03:45 pm

Australia Home-loan Approvals Drop To 10-year Low As Rates Deter Buyers

Australian Home Loans Rise on Record-Low Rates

Property prices declined in the first quarter by the most since 2008 as floods in the nations east coast disrupted the market and homes listed for sale climbed alongside rates. The total value of loans fell 0.1 percent to A$19.3 billion ($20.4 billion) in March, todays report showed. Owner Occupiers The value of lending to owner-occupiers declined 1.1 percent, the report showed. The value of loans to investors who plan to rent or resell homes advanced 2.1 percent. First-home buyers accounted for 16 percent of dwellings that were financed in March, up from 14.9 percent in February and lower than 16.4 percent a year earlier, the report showed. An index measuring the weighted average of prices for established houses in eight major cities slid 1.7 percent in the first quarter from three months earlier, the biggest fall since the third quarter of 2008, a government report showed May 2. There was a decrease in transactions in Queenslands capital, Brisbane, it said.
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It dropped as low as 49 per cent in 2010 after the GFC. In contrast, the Reserve Bank of New Zealand from October 1 is requiring its banks to restrict high LVR mortgages in an attempt to take the heat out of New Zealand's property market. This will limit NZ banks to offering 10 per cent of their home loan portfolio in high LVR mortgages - considered to be 80 per cent or more. It aims to limit house prices and credit, while keeping interest rates low to support the overall economy. Macquarie Research senior economist Brian Redican doubts these so-called 'macro prudential rules' will be introduced in Australia, at least in the short term.
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More banks offer low deposit home loans

The value of loans for investment housing in July rose 2.9% from June, the ABS said. While other economic indicators such as consumer confidence have been patchy this year, home loans have steadily risen--creating a small bright spot in an otherwise darkening economic outlook as a mining boom that has powered growth for a decade slows. Home loan approvals data signal whether consumer demand for debt is increasing, making it a useful measure of sentiment at a time when many Australians still prefer to save their money amid continuing anxiety over the state of the global and local economy. The central bank rate has cut interest rates steeply since late homepage 2011 to a record low 2.5%, in a bid to spur weaker parts of the economy like consumer sentiment and construction. Loan approvals to build new houses fell 2.1% in July from June. Approvals to buy new homes rose 5.9%, while lending for already built houses rose 2.7% in the month. -Write to James Glynn at (END) Dow Jones Newswires 09-08-132148ET Copyright (c) 2013 Dow Jones & Company, Inc. This article appears in: Interactive Charts Default Setting Please note that once you make your selection, it will apply to all future visits to
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