Low Interest Rates Help Boost Housing Finance
The demand for home loans rose slightly more than expected in November, according to the Australian Bureau of Statistics.
The data showed the number of home loans granted in November rose a seasonally adjusted 1.1 per cent to 52,912.
The rise in home loan approvals means there is speculation that there won’t be another interest rate cut.
Commonwealth Bank of Australia chief economist Michael Blythe says it means the Reserve Bank of Australia 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.”
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.
As part of its 2013 election commitments the Abbott Government announced the following changes (effective from 1 January 2014);
– The instant asset write off threshold has reduced from $6,500 to $1,000 for assets acquired and installed ready for use after 31 December 2013.
– Assets costing $1,000 or more will need to be depreciated in the general small business pool (at a rate of 15% in the first year and 30% thereafter)
– The $5,000 accelerated initial deduction for Motor Vehicles (costing more than $6,500) has been repealed
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