Housing finance jumps, market drops: Economy roundup

Housing finance increased strongly in March, as lower interest rates and first home owner grants lured buyers into the market.

The number of home loans, seasonally adjusted, increased 4.9% in March from 0.4% in February, data from the Australian Bureau of Statistics shows.

First-home owners, as a share of owner-occupied borrowers, jumped to 27.3% in March from 26.5% in February, which the ABS describes as “the highest proportion since the series commenced in 1991.”

The value of owner-occupied housing finance rose 7.3% to $15.73 billion.

The value of investment housing fixed loans rose 4.7% to $4.96 billion. The number of approvals for the purchase of new dwellings rose 8.8%, while commitments for the purchase of established dwellings rose 3.8%.

Westpac Economics says the demand for housing finance has rebounded substantially over the last seven months.

New lending to owner-occupiers is up 30% over the seven months, and finance to owner-occupiers for the construction of new dwellings has surged 41% over the last four months.

Lending to first home buyers is up 79% over seven months and upgraders are responding – with lending up 15% over the same period.

Investors have been the weak spot, reflecting the impact of tighter lending standards.

Today the market has been down 1.5% to 3868.2 at 12.20 AEST, and the Australian dollar fell slightly but recovered to US76.68 cents.