With exceptions, you normally associate first home buyers with people who’ve been in the workforce for a couple of years, those starting a family or couples who have decided to settle down with the apple of their eye. It is this demographic that may have an influence on whether there is a rate cut in the months ahead.
Loan Market spokesperson Paul Smith believes that a downturn in NSW first homebuyer activity, brought about by the end of stamp duty concessions, has had a major impact on the number of home loans approved over the January selling period. This slowdown in approvals could provide added pressure for the RBA to consider a rate adjustment next month, Smith claimed.
“While we had seen nine months of increasing activity and January is traditionally a slower month, stalling in this sector does provide further evidence for a rate cut in coming months. Nationally, there were only 600 less approvals from December 2011 to January 2012, but in NSW specifically, the number dropped by over a thousand,” he said.
Smith added that while overall conditions in the economy were sound and the RBA cash rate sits at a modest 4.25%, there remains an undercurrent of consumer caution that is stalling sectors such as retail.
“While it’s to be noted that many economic indicators are in targeted ranges, there may be scope for an interest rate cut to boost certain sectors that aren’t responding.”
ABS Housing Finance - January 2012 Results:
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