Home Loan Approvals Growth Proves Better Than Expected In March

In March, home loan approvals in Australia rose by 5.2% during the month, beating analyst’s forecasts for a more modest improvement of 4%, the latest figures from the Bureau of Statistics have shown.

This is the most significant monthly increase in home loan approvals since March 2009, suggesting that the housing sector is heading towards a better future after suffering a tough couple of years.

Compared with February, the value of loans for investment housing gained 2.1%, while finance approvals for new house construction advanced 4.6%. The number of Australians who get approval for a new home purchase rose by an impressive 21.1% month-on-month, while lending for houses that were already built went up by 4.2% in March.

Since early 2012, the country’s housing market has been mired in a prolonged slump despite the steep interest rate cuts, The Australian commented. In May, the Reserve Bank of Australia slashed the cash rate to a new record low of 2.75% to reinvigorate certain sectors of the economy, such as housing construction, as the country begins its painful shift away from a decade-long mining boom.

The strong increase in building approvals is an encouraging sign that the lower interest rates are finally helping to support Australia’s housing sector, Michael Workman, senior economist at Commonwealth Bank, said. He predicts that data for April will reveal an increase in approvals of up to 4%.