Double digit home loan growth to start 2014
Figures released by the Australian Bureau of Statistics (ABS) today revealed that home loan approvals grew 11 percent in the first quarter of 2014 compared to 2013.
Loan Market director Mark De Martino said record low interest rates and strong real estate sales were the catalyst for the highest Q1 growth since 2002.
“The first quarter of 2013 only grew two percent from the previous year so to see first quarter of 2014 rebound so strongly means consumer confidence has rapidly returned,” Mr De Martino said.
Mr De Martino pointed out the data released for March showed a small one percent drop from February and that April would likely show little, if any growth because of the extended holiday period.
“The key to maintaining the same levels of approvals and purchasing is low interest rates. The Reserve Bank of Australia (RBA) has been very clear that rates are likely to stay where they are for an indefinite period of time.
“By setting a rate-hold mentality, home owners and buyers will remain confident knowing their repayments will stay low and they’re saving money in interest charges,” Mr De Martino said.
The data for all states showed Q1 growth with New South Wales and Queensland leading the way at 15 percent growth. South Australia and Western Australia both grew nine percent and Victoria six percent.
Mr De Martino said the ABS stats showed particularly strong growth in March for new home purchases, up 13 percent from February and refinancing of existing dwellings, up 12 percent for the same period.
“Even without cash rate movements by the RBA, this data supports the fact competition between lenders is high and they’re attracting new customers.
“The cash rate has only dropped 50 basis points over the past year and we’re seeing 11 percent quarter-on-quarter growth for home loans. Whilst the low cash rate is the primary driver, the lack of rate movements hasn’t slowed down growth,” Mr De Martino said.