Economists have stated that demand for housing loans fell for the first time in 10 months during July as the demand for property by first home buyers and investors subsided.
The Australian Bureau of Statistics (ABS) announced yesterday that the number of home loan approvals for owner- occupied housing fell by 2 per cent in July.
The fall of home loan approvals was the first monthly decline since September 2008, and was worse than market forecasts for a fall of 1 per cent.
Kieran Davies chief economist of the Royal Bank of Scotland stated that demand for housing loans would continue to drop during the next few months after many first home buyers rushed to purchase before June 30.
From October 1st, the First Home Buyers Grant will be reduced to $10,500 and $14,000 respectively, before reverting to $7,000 on January 1st 2010.
The number of first home buyers taking out new home loans fell for the second consecutive month in July to 25.7 per cent from 27.1 per cent in June. This was the lowest proportion of loan approvals for first home buyers since December 2008.
Spiros Papadopoulos NAB's senior economist stated that increasing speculation that the RBA is going to raise interest rates will dampen demand for new housing loans for first home buyers and investors.
Debt futures markets have priced in a 25 basis point lift to the cash rate in November.