The news has been taken as an indication of a weakening economy in the aftermath of a recent decrease in retail sales, the loss of 8,800 jobs and the realisation of the seventh consecutive monthly trade deficit. The data has also prompted speculation that Glenn Stevens, RBA’s Governor would be looking at dropping interest rates in November after the cuts in May and June left the national cash rate at 3.5%. Analysts have been speculating about whether 2012 would hold further rate cuts but the last three months have not seen any changes coming from the Reserve Bank of Australia with regard to the national cash rate.
The decrease in home loan approvals has also been taken as yet another sign of consumer conservatism and analysts warn that until consumer behaviour trends can do a turn around, the property market growth rate may continue to disappoint forecasters. The recent credit shock, which highlighted how much debt Aussies have accrued in credit card debt, coupled with the an increasing urgency to increase their savings coffers seems to have had its effect on the property market with consumers not being taken in by low interest rates, preferring to invest their energies into paying debts off and coping better with the rising cost of living which hit a high when the government launched its carbon taxes, sending household utility costs skyrocketing.
The sum total of mortgages dropped to $20.1-billion, a decline of 18 %, for the month, while lending to owners decreased by 1.4% compared to figures released for June. Investor home loans for resale and letting decreased by 2.7%, further highlighting investor conservatism and a slowdown on property developments. However, the market is still optimistic in this respect, with property investment loans on offer at http://www.bankwest.com.au/personal/home-loans/home-loans-overview#investing-in-property.
On a more positive note, the number of loan approvals granted to first time homebuyers increased from 18.5% in June to 19.2% in July. Even more impressive was the year on year increase of 16.5% to first time buyers and indicating that there is potential for growth from the younger generations.
The economic slow down has been attributed to the rising cost of imports and weaker housing markets even though the gross domestic product increased by 0.6% from the three months through to June when it saw a 1.4% improvement.
The country’s two biggest lenders, Westpac Banking Corp (WBC) and the Commonwealth Bank of Australia (CBA) have announced that fixed mortgage rates have been reduced in an effort to lower borrowing costs for consumers and stimulate more activity in the housing sector. By contrast, an August report revealed that house prices had risen in the second quarter after five consecutive quarters of lowering prices. In addition, while analysts seem to concur that the downward spiral has come to its highly anticipated end, the last three to four months have only reflected what has been considered as flat line activity. It’s not all bad news though, as a spike could cause further market volatility and the flat lining could be giving home buyers more time to ease into the property market.
My advice to small business owners is to have some viable alternatives in place while waiting for that bank loan to be approved. Your mentioning the merchant cash advance lending industry and it’s growth is just one of many options now available to small businesses.
ReplyDeleteAnother financial platform that seems to be working quite well is providing in house customer financing to new customers. This can bring the much needed cash flow that could tie a small business over during tough times as well as assist an aspiring business owner wanting to expand.