Some good news is coming out from Housing Industry Association.'The 2.1% increase in new home lending in the month of December 2011 suggests the potential of a modest revival in the lending market. Let's hope, however, that the recent decision by two of our big banks to independently lift their variable lending rates does not undo the work of the Reserve Bank,' said HIA senior economist, Andrew Harvey.
'The improvement in lending for established homes also continued, with the number of loans up by 2.3% in December, again highlighting the impact that the changed interest rate cycle had begun to have on homebuyer confidence,' explained Harvey.
The recovery in the aggregate number of loans for first time buyers also continued, with these loans comprising 20.9% of all dwellings financed in December 2011, which compares to 16.9% a year earlier, he pointed out.
'While modest, the improvement in lending following the late 2011 interest rate cuts suggest a growing number of people are preparing to enter the housing market. There is a risk, however, that the recent action of two trading banks could undo the modest improvement in demand,' warned Harvey.
'Effectively the decision could dash more than four months of work on improving sentiment, and in an economy for which the Reserve Bank has just downgraded its growth forecasts the last thing we need is this additional weight in the saddle bags already dragging on consumer sentiment,' he added.
In December 2011 the seasonally adjusted number of loans for new housing increased by 13.3% in Victoria, 1.1% in Western Australia, 43.7% in the Northern Territory, and 3.9% in the Australian Capital Territory.
The number of loans for new housing fell by 3.6% in New South Wales, 4.9% in Queensland, 9.3% in South Australia, and 1.9% in Tasmania.
