This gives central bank scope to raise interest rates for a 3rd time this year
Australian home-loan approvals rose by the most in six months, increasing the central bank’s scope to raise interest rates for a third time this year.
 |
| Framing up: The number of finance approvals for the construction of new homes surged 8 per cent in September, taking the gain since August 2008 to 84 per cent |
The number of loans granted to build or buy houses and apartments climbed in September by 5.1 per cent to 65,505 from August, when they fell a revised 1.9 per cent, the statistics bureau said in Sydney yesterday. The median estimate of 17 economists surveyed by Bloomberg was for a 3 per cent gain.
Rising home loans, stoked by grants from Prime Minister Kevin Rudd’s government, add to signs of an economic rebound that may prompt governor Glenn Stevens to raise borrowing costs on Dec 1 for a third straight month, according to analysts surveyed by Bloomberg. Rising house prices, which jumped 8.4 per cent in the six months through September, are among reasons the bank raised borrowing costs.
‘Stevens has flagged the risk of excesses forming in the housing market’ and will be keen to see slower demand in coming months as borrowing costs rise and grants are cut, said Helen Kevans, an economist at JPMorgan Chase & Co in Sydney.
The Australian dollar rose to 92.58 US cents at 3.06 pm in Sydney from 92.21 cents just before the report was released. The two-year government bond yield gained three basis points to 4.68 per cent. A basis point is 0.01 percentage point.
First-home buyers accounted for 26.1 per cent of dwellings financed in September, up from 24.7 per cent in August, the statistics bureau said yesterday.
Treasurer Wayne Swan last year tripled to A$21,000 (S$27,005) a grant to first-time buyers of new homes, and doubled to A$14,000 payments for those purchasing existing dwellings. In May, he extended the increases through to the end of September, when they were partially reduced. The payments will be cut to their original A$7,000 at the end of this year.
The number of finance approvals for the construction of new homes surged 8 per cent in September, taking the gain since August 2008 to 84 per cent.
‘A housing construction boom is set to kick in from late 2009 and will be a key growth engine through 2010,’ Westpac Banking Corp economists including Matthew Hassan in Sydney said in a note to investors.
Mr Stevens last week became the first central banker in the world to raise borrowing costs twice this year, when he increased the official cash rate target to 3.5 per cent, citing a rebound in consumer confidence and Chinese demand for exports.
Mr Stevens will boost the overnight cash rate target by another quarter percentage point next month to 3.75 per cent, according to 14 of 17 economists surveyed by Bloomberg. That would be the first time in history the central bank has boosted borrowing costs at three successive meetings.
Investors are betting that there is a 68 per cent chance Mr Stevens will raise the rate by a quarter point, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange at 2.18 pm.
Gross domestic product will expand 1.75 per cent this year and 3.25 per cent in 2010, the bank said on Nov 6. Three months ago, it forecast gains of 0.5 per cent and 2.25 per cent respectively.
Jobs advertised in newspapers and on the Internet fell 1.7 per cent in October, according to an Australia & New Zealand Banking Group Ltd report released in Melbourne yesterday.
Speculation that Mr Stevens will continue to raise borrowing costs, as counterparts in the US, Europe and the UK keep their benchmark rates at historic lows, has driven a 32 per cent gain in the Australian currency this year, pushing it towards parity with the US dollar.
Source : Business Times – 10 Nov 2009
Lush Dream Home 