Home-loan approvals in Australia up for 3rd month

Home-loan approvals in Australia up for 3rd month

(SYDNEY) Australia's home-loan approvals climbed for a third straight month in February as rising wages buoyed confidence among property buyers, signalling a nascent housing recovery that may boost economic growth.

A housing pickup may bolster expectations that the Reserve Bank is set to raise rates

The number of loans to owner-occupiers to build or buy homes or apartments rose 0.3 per cent to 62,369 from January, the Bureau of Statistics said yesterday, matching the median estimate of 20 economists in a Bloomberg News survey.

A housing pickup may bolster expectations among futures and currency traders that the Reserve Bank of Australia is poised to raise interest rates as soon as next month. The economy's 16-year expansion may gather pace as home-buyers shrug off last year's three rate increases and investors return to the property market to take advantage of rising rents.

'Households appear to have adjusted very well to three rate hikes, so the cash rate clearly isn't that restrictive,' said Ong Su-Lin, senior economist at RBC Capital Markets in Sydney. 'It supports the Reserve Bank's tightening bias. All the data in early 2007 has shown a real step up in the economy.'

The Australian dollar rose close to a 17-year high after the report. The currency bought 82.46 US cents at 4.32pm from 82.38 cents immediately before the figures were released.

The yield on the 10-year bond fell one basis point, or 0.01 percentage point, to 5.89 per cent.





Total lending climbed 3.3 per cent to A$20.9 billion (S$26.1 billion) in February, yesterday's report showed. The number of loans approved in January gained a revised 0.5 per cent. The value of lending to owner-occupiers rose 0.9 per cent to A$14.3 billion in February. The value of lending to investors who plan to rent or resell homes surged 8.9 per cent to A$6.6 billion.

Australia's A$934 billion economy added more than 300,000 jobs last year, the biggest annual employment gain since 1989, and the jobless rate is close to a 31-year low.

Wages rose 1.1 per cent in the fourth quarter from the previous three months, according to a government index, the fastest pace of growth in the index's nine-year history.

That buoyed home-buyers even after the Reserve Bank's three interest-rate hikes last year, which took the overnight cash rate target to a six-year high of 6.25 per cent. - Bloomberg