Home-loan Surge Boost For Builders
The Age
Tuesday September 10, 1996
Canberra.
Sparring in July by the major banks over interest rates has given hope to the embattled housing industry that it may be emerging from a 15-month trough.
Housing finance approvals rose in July by 16 per cent seasonally adjusted, the second-largest monthly rise on record, as mortgage rates fell.
The rate cutting by banks may have temporarily blunted the strong push by mortgage originators into the housing finance market. Overall, originators recorded only a comparatively small increase in approvals.
While a significant proportion of the total increase in approvals was due to refinancing of loans, and economists believe approvals slipped back in August, the housing industry trumpeted the figures as ``an extremely welcome sign".
A national director of Master Builders Australia, Mr Wilhelm Harnisch, said the increase was somewhat unexpected because of rampant Budget uncertainty in July.
``However, the fierce competition between the banks and other financial institutions since June has had an obvious impact on the housing market by boosting home buyers' confidence, " he said.
The Reserve Bank announcement on 31 July of a cut of 0.5 percentage points in official interest rates should lead to a modest upturn in coming months, he said.
The national executive director of the Housing Industry Association, Dr Ron Silberberg, said the housing sector was poised to move into recovery, with new home starts up sharply.
The Australian Bureau of Statistics reported yesterday that the 16 per cent rise in the number of dwellings financed came through a 8.7 per cent jump in finance for construction, 10.
6 per cent for new dwellings and 17.5 per cent for established homes.
While the July changes were promising, only finance for established dwellings increased during 1995-96. This reflects an increase in refinancing as mortgage originators made a greater impact with lower interest rates.
But the move by banks to confront originators such as Aussie Home Loans head-on saw banks record a 19.1 per cent increase in housing finance in July. Building societies had a 3.1 per cent rise, while originators and others improved only 1.8 per cent.
Victoria dragged its heels in comparison with the rest of the country, with approvals rising only 13 per cent. Tasmania led the way with a 26.7 per cent rise.
There were 40,483 dwellings worth $4.01 billion financed in July, up from 34,894 worth $3.42 billion in June.
Westpac said housing finance was volatile, and a sizeable upturn was still some way off.
Meanwhile, the Construction Forecasting Committee found that non-residential building activity increased by an estimated 11 per cent last financial year.
© 1996 The Age