Good news from this week was that interest rates were left on hold by the Reserve Bank. The decision to maintain the official cash rate at 4.75% was widely anticipated. Since the rate rise in November the economic news has been relatively sedate and forecasts for further rate rises are being pared back. Financial markets are now forecasting only one 25 basis point rate rise during 2011 which is likely to be in the second half of the new year. The average standard variable mortgage rate is now slightly above average at 7.8% (about 58 basis points higher than the 10 year average).
The latest housing finance data was released by the ABS this week, showing that the rate of finance approvals for dwellings appears to have bottomed. In seasonally adjusted terms the number of housing finance commitments increased across all four categories reported over the month to October: owner occupier loans were up 1.9%, loans for the construction of new dwellings were up 0.1%, loans for the purchase of new dwellings were up the greatest with a 9.4% increase and loans for the purchase of established dwellings were up 1.8% during October. The total value of loans for housing was up by 2.8% for owner occupiers and by 1.1% for investors. The improvement in housing finance needs to be viewed in context however, with the total value of loan commitments almost 21% lower than the same time last year. The overall trend in the data suggests that the rate of finance commitments has reached a trough, keeping in mind that any ‘green shoots’ may be trampled by the November interest rate rise.
Job ads data was released by ANZ this week showing a 2.9% lift in the number of jobs being advertised across both the internet and newspapers in November. This was the largest increase since February and foreshadowed a strong jobs growth figure in the ABS Labour Force statistics. According to the ABS data 54,600 new jobs were created in November and the unemployment rate fell back to 5.2%, once again approaching full employment.
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