Australian Housing Finance Unexpectedly Falls in September

By James Glynn Features Dow Jones Newswires

The number of Australian home-loan approvals fell unexpectedly in September, the latest sign that property speculation is being crimped by tighter lending rules aimed at investors.

Continue Reading Below

The number of home-loan approvals fell a seasonally adjusted 2.3% in September from August, the Australian Bureau of Statistics said Thursday. Economists surveyed ahead of the announcement had expected a rise of 2.0% over the month.

The value of loans for investment housing rose by 6.2% from August, the ABS said.

Recent strength in investor lending is being watched by the Reserve Bank of Australia and the banking regulator amid concerns around rising instability risks.

New curbs on mortgage lending were introduced earlier this year to slow the growth of household debt. Investors have been targeted with banks asked to tighten criteria around interest-only loans.

The policy approach has had some success in lowering house price growth, especially in the largest market of Sydney.

Continue Reading Below

Still, debt accumulation is outstripping income growth by a large margin, suggesting concerns around household debt will remain over the long term.

The RBA left interest rates on hold this week at a record low of 1.5%, offering little indication that it plans to raise rates any time soon.

Benign inflation and the lowest income growth in decades is preventing the RBA from joining its global peers in tightening policy settings.

Equally, lower interest rates appear to have been ruled out by the sense that it would do little for the economy beyond fanning potential speculation in housing.

The RBA will publish new economic forecasts on Friday with some economists expecting the outlook for inflation to be lowered, indicating interest rates could remain at record lows over the long-term.

-Write to James Glynn at james.glynn@wsj.com

(END) Dow Jones Newswires

November 08, 2017 19:48 ET (00:48 GMT)