Home loan approvals in Australia surged the most in four years in March as a series of interest rate reductions by the central bank since 2011 boosted demand for mortgage.
The number of owner-occupied dwelling finance commitments rose 5.2 percent year-on-year in March after adjusting to seasonal variations, the Australian Bureau of Statistics said Monday. This was the biggest gain since March 2009.
Furthermore, the number of loan approvals increased for a third straight month after 2.1 percent rise in February and a 0.7 percent gain in January.
The total value of investment housing commitments increased 2.1 percent in March on a seasonally adjusted monthly basis. The number of loans approved for purchase of new dwellings surged 21.1 percent in March following a rise of 0.4 percent in February.
However, the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments fell to 14.2 percent in March from 14.4 percent in February.
Last week, the Reserve Bank of Australia unexpectedly cut its benchmark cash rate to a record low of 2.75 percent to underpin economic growth. Governor Glenn Stevens said in a statement after the meeting that as the peak in the level of resources sector investment is likely to occur this year, there is scope for other areas of demand to grow more strongly over the next couple of years.
RBA started its easing cycle in November 2011 and has reduced the rate by a cumulative 200 basis points since then.
Meanwhile, a survey by the National Australia Bank showed Tuesday that business confidence declined in April ahead of the federal budget. Firms' operating conditions still remained "very difficult", though it showed some improvement from March when it slumped to the weakest level in almost four years.
The NAB business confidence index fell to -2 in April from 2 in March. The conditions index edged up to -6 from -7 in March.
Despite less negativity in retail and manufacturing, activity remained still very poor and labor market showed new signs of weakness, NAB said in the survey report. Also there was no sign of upward momentum with forward orders, capacity utilisation and employment all staying very subdued and weaker, the report added.
Treasurer Wayne Swan will present the 2013-14 budget on Tuesday and is expected to lower the economy's growth outlook. Also, the budget will show public finances still in the red due to weaker than expected revenue.
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