A rise in home loan approvals during November means there won’t be another interest rate cut, an economist says.
The number of home loans during that month rose by 1.1 per cent, official figures show.
Commonwealth Bank of Australia chief economist Michael Blythe says it means the Reserve Bank won’t cut the cash rate again during this cycle.
“We think they’re done because those interest rate sensitive parts like housing, as we’ve seen today, are moving,” he said.
“You don’t need any more help from that perspective and the sectors that do still need help would benefit more from a lower currency.”
Home mortgage approvals rose to 52,912 in November, compared to 52,321 approvals in October.
Economists had expected the number of housing finance commitments to rise 1.1 per cent in November.
Total housing finance by value rose 1.7 per cent in November, seasonally adjusted, to $26.934 billion, the Australian Bureau of Statistics said on Monday.
Blythe said interest rates were likely to rise, from a record low of 2.5 per cent, in late 2014 as a weakening Australian dollar added to inflationary pressures.
National Australia Bank senior economist Spiros Papadopoulos said that although the housing market was strengthening, it would not be enough to rebalance the economy as the mining investment boom winds down.
Unemployment would continue to rise, meaning the Reserve Bank of Australia would be unlikely to raise the cash rate this year, he said.
“This is another indicator that points to the strength in the housing market, alongside rising house prices the upward trend in building approvals that we’ve seen in recent times,” Papadopoulos said.
“We think there’s still going to be a hole left in the investment outlook and although the housing and construction part of the equation will be supporting growth, the other non-mining sectors will still be quite soft and not strong enough to offset the mining slowdown.
“We don’t think it’s going to be enough overall, which is why we think the unemployment rate is going to head higher and why the RBA won’t be in a position to raise rates this year.”
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