Home loan approvals jumped in September as low interest rates continue working their magic.
The number of owner-occupier mortgages approved rose by 4.4 per cent in September, the Australian Bureau of Statistics said on Monday, beating economists' expectations of a 3.5 per cent rise.
The increase came a month after the Reserve Bank of Australia cut its interest rate to a record low of 2.5 per cent.
"Interest rate cuts do take time to work their way through the economy so that's what we're seeing," Commonwealth Bank associate economist Diana Mousina said.
"Even though we might get some volatility month by month, the overall trend has been quite a sustained upturn in housing activity."
The RBA appeared to be finished with cutting rates, Ms Mousina said.
But JP Morgan economist Ben Jarman said a further cut was on the cards in 2014.
"Last week, the RBA sounded quite anxious about the fact the currency was still too high and still not helping the economy rebalance and they've also downgraded their growth forecasts," Mr Jarman said.
"Even with housing on an upswing, there's just not enough activity elsewhere to keep the economy pushing up towards trend."
Although investor activity remained steady, it appeared first-home buyers were being priced out of the market, Mr Jarman said.
"We've seen new loan writing proceeding at a pretty robust pace throughout this year and it continues to be driven substantially by the investor community," he said.
"Their share of new loans held relatively steady, whereas the first-home buyer share has fallen yet again - it is now just around 12 per cent which is the lowest in the history of the recorded data.
"They continue to be priced out which, we think, has been an important phenomenon in keeping overall credit growth pretty low, because first-home buyers being younger and earlier in their careers tend to have less assets and tend to take out larger loans."
Share
