Aussies not deterred by interest rates

The Australian Bureau of Statistics released data today showing a seasonally adjusted 63,335 loans for owner-occupation were agreed to by banks and home lenders in March, the highest level since July last year. First-time home buyers now make up 18.2 per cent of all financed dwellings, the highest level since April 2006. Importantly the biggest and until recently most sluggish NSW market posted it's third monthly increase in a row.


It appears many Australians are determined to own their home despite three interest rises in the last 12 months and given the tax cuts that will kick-in post June 30th many more may be enticed into taking out a home loan. Another rate rise at the RBA's May meeting was squashed by subdued inflation data however the strong employment data released last week along with the latest housing stats put interest rates back in focus again. Attention will turn to wages growth which has been surprisingly subdued given the tight labour market conditions. Any sign that the inflation genie is escaping the bottle may force the RBA's hand in the coming months.