 Consumers confident about spending
Consumer confidence is fighting back and the housing market is reaping the rewards, with data from RateCity showing there has been an 84 per cent increase in home loan and credit card applications in the September quarter.
In a survey of its business data, RateCity reports large increases in searches for loans and credit cards since July, which indicates that borrowing could rise as the economy recovers.
RateCity CEO Damian Smith says the confidence in spending comes as the economy improves faster than expected and figures show increases in property values and job adverts.
“Australians are now more confident in the economy and are looking at not only spending their savings but also borrowing more,” he said.
Applications for personal loans rose 53 per cent and credit card applications grew 50 per cent in the September quarter.
An increase of 47 per cent in the number of people looking for a home loan in the three months since July shows consumer confidence is growing despite recent interest rate rises.
Australian business investment seems to also have enjoyed a positive June quarter, with a 3.3 jump in investment in this market.
The Australian Bureau of Statistics data revealed that business investment surged and an emphasis on equipment and machinery spending helped to boost the figures.
Two weeks ago the Reserve Bank of Australia moved to raise the official cash rate by 25 basis points to 3.25% and it didn't take long for the major banks to follow, passing on the full increase to home owners. Standard variable mortgage rates with the Big Four now average close to 6 per cent.
Economists had been tipping another small increase of 0.25% in November, but within the minutes of the October Reserve Bank meeting, which were released yesterday, there is strong suggestion that the Melbourne Cup Day rate increase could be as much as 50 basis points.
The RBA has long been saying that the historically low cash rate was an 'emergency setting' and obviously could not last, once the economy starting improving.
An increase of 25 basis points on a $250,000 mortgage means close to an extra $40 per month in repayments.
Join the discussion on Everything else about home loans
|