Approvals for new loans have increased, according to the Reserve Bank of Australia (RBA).
The rise is consistent with the improved housing market conditions evident in a range of indicators, such as auction clearance rates and housing price growth, especially in New South Wales and Victoria, the RBA said.
“If housing conditions continue to improve in the coming months, we would expect to see a further rise in loan approvals,” said Christopher Kent, the central bank’s assistant governor for financial markets.
Lenders have passed most of the cash-rate reduction on to housing interest rates, according to Kent.
Following the two consecutive rate cuts in June and July, lenders reduced their standard variable rates (SVRs) on housing loans by an average of 0.44%, he said.
The average interest rate paid on outstanding variable-rate housing loans in the central bank’s Securitisation Dataset fell 0.23% in June, he said.
“Similar reductions in outstanding rates are expected to be recorded for July data. So the declines in SVRs are being pushed through to all existing borrowers, which make up the so-called ‘back book’. Rates on new loans have also been lowered,” he said.
New borrowers and those refinancing existing loans continue to be offered interest rates that are—on average—below those applying to existing loans, according to Kent.
"So customers, who are actively looking around at what's on offer, are able to take advantage of the strong competition among lenders that is focused squarely on the ‘front book’,” he said.