The decision by Australia’s major banks to move rates independently of the Reserve Bank could have an adverse impact on home lending, the Housing Industry Association has claimed.
According to the latest housing finance figures for December 2011, the November and December official interest rate cuts had a positive impact on home buyer confidence and new home lending.
"The 2.1 per cent increase in new home lending in the month of December 2011 suggests the potential of a modest revival in the lending market,” HIA senior economist Andrew Harvey said.
“Let’s hope, however, that the decision by our big banks to independently lift their variable lending rates does not undo the work of the Reserve Bank.
"The improvement in lending for established homes also continued, with the number of loans up by 2.3 per cent in December, again highlighting the impact that the changed interest rate cycle had begun to have on homebuyer confidence.”
The recovery in the aggregate number of loans for first time buyers also continued, with these loans comprising 20.9 per cent of all dwellings financed in December 2011, which compares to 16.9 per cent one year earlier.
“While modest, the improvement in lending following the late-2011 interest rate cuts suggests a growing number of people are preparing to enter the housing market. There is a risk, however, that the recent action of the banks could undo the modest improvement in demand,” Mr Harvey said.
“The decision by the banks could dash more than four months of work on improving sentiment, and in an economy for which the Reserve Bank has just downgraded its growth forecasts the last thing we need is this additional weight in the saddle-bags already dragging on consumer sentiment.”