The hike of the interest rate in November by the Reserve Bank start hitting thousands of households has become apparent in February on home loan approval numbers. The number in February fell at abnormally high rates- a 5.6% reduction according to the Australian Bureau of Statistics. The number of home loan approvals hasn’t been that low in a month since February 2001. Initially, the economists had predicted that home loan approvals would fall almost 1.5%.
With average people facing the Reserve Bank’s high interest rates, less are interested in buying homes. Those who don’t want to buy are looking in vain for “no deposit” mortgage products, which simply don’t exist anymore, according to the mortgage broker market of home loans Macarthur. The first-time home buyers want to borrow the entire cost of the property to get a new home, but sadly these mortgages were the first to go when the global recession hit.
Approvals related to home loans Sydney hit all time low right from February 1997, according to Fairfax newspapers, with a 10.1% reduction. Later last year, there is a 6% drop and this is possibly the biggest reduction as recorded by the Real Estate Institute of Victoria in almost two years.
For buyers planning to get their own property, Sydney’s prices might lead buyers in that direction. The seven successive interest rate hikes turned numerous buyers away from home buying, as reflected with the drop of home loan approvals, but specific areas will continue to outperform others. In spite of the latest drop in the Sydney home prices, it’s still the costliest city to live in the country. Aussie reports that new home loan approvals dropped by 20% in the last 4 months. However, it is considered as a buyer’s market across most of the country, specifically for properties that are priced above $700,000.
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