Applications for new home loans hit an all-time low in several years as the housing crisis continues to heat up in Australia. And the experts are fearing that it will only get worse as many factors continue to plague Australia’s economy. The drop in the number of new home loan applications is certainly an indicator as to how deep these factors are affecting the Australian economy.The bad news in the global housing market along with the fact that banks are making it increasingly more difficult to procure a home loan by raising interest rates or expecting the consumer to have perfect credit are being blamed as the root of the problem. But the issue is further compounded by the rise in the cost of living index. According to Brian Redican, a senior economist at Macquarie Group Ltd. Of Sydney, consumers are well aware of the message that the Reserve Bank is sending based on the moves on the interest rate.Redican feels that there is no need for them to continue raising the rates on home loans. Kieren Davies who is a chief economist at ABN Amro Australia Ltd. (also of Sydney) stated that it is evident that the Reserve Bank is achieving their goals with these measures since the demand slowed down very significantly in the first quarter of the year.
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