Mortgage interest rate rises are slowing housing finance according to Reserve Bank of Australia figures

The Reserve Bank of Australia (RBA) said three interest rate rises in 2006 had dampened recent demand for housing finance.

Australia’s central bank said in its quarterly statement on monetary policy that upward movements in the cash rate in May, August and November last year had brought housing loan rates to a level that was little above their medium-term average.

But the trend did not appear to be continuing.

“Household credit growth and housing loan approvals both moderated through the second half of last year though this trend does not seem to have continued into 2007,” the RBA said.

The RBA said business sector borrowing had continued to expand rapidly.

“Business appetite for debt is being stimulated by favourable economic conditions and high levels of investment, though there is also a more general mood in the business sector in favour of greater leverage, as evidenced by the range of corporate takeover proposals now in train.”
Source: AAP

About: Rick Adlam: Rick Adlam has been helping clients with home loan finance since 1985 when he was home consultant with AV Jennings. Rick started Equity Home Loans in 1996 to help homeowners become property investors. Rick currently consults in the development of Mr Mortgage for mortgage brokers and HomeMate for new home buyers. Website: http://www.mrmortgage.com.au