More interested home buyers now in the market
As the interest rate continues to show more stability, lending by banks also become relaxed. As such, more first-time buyers are encouraged to go back into the housing market as it has also dropped to the lowest level recorded in the past four years.
However, an economist thinks the Reserve Banks should be cautious and not go all the way in raising rates for a few more months should the lending is to bloom. An increase of 5.2 per cent in the borrowing by households has been recorded in July but is still 6 per cent lower as compared to the previous year.
Savanth Sebastian, an economist from the Commonwealth Securities has stated that the frequency of increases in the interest rates in the year earlier did have its toll. He also stated that there is no thawing in conservatism and so the Reserve Bank should allow its growth. It is best then for the Reserve Bank to wait a couple more months to measure the strength of recovery before they decide on their next move on the interest rates.
There are speculations that the central bank may lift rates before the end of the year after a series of upbeat economic data. The Reserve Bank was reported to have left the cash rate unchanged in the past four consecutive months stating that a policy was suitable at the time being. Six rate increases followed this between October of last year and May.
A mortgage broker stated that almost 28 per cent of increase in the number of inquiries from possible home buyers was recorded in August compared to that of the previous month. Dean Rushton, chief operating officer of the Loan Market stated that there are some banks which are easing their lending requirements as a consequence of the improved in the economic view.
Rushton further stated that banks reduced their loan to value ratio (LVR) to an estimate of 90 per cent during the global financial crisis. Now, there are some changes made in the policy of some banks which resulted to the increase of their lending ratios.
