HOME loan approvals retreated for a third straight month in December after a reduction in government subsidies and interest rate rises dampened enthusiasm for mortages, economists say.
Australian housing finance commitments for owner-occupied housing fell 5.5 per cent in December, seasonally adjusted, to 55,632 the Australian Bureau of Statistics (ABS) said.
That was weaker than economists' expectation for a fall of five per cent in the month.
Total housing finance by value fell by 2.8 per cent in December, seasonally adjusted, to $21.900 billion.
NAB senior economist David de Garis said the pullback in approvals for housing loans was expected after federal government stimulus measures were wound back and increases to interest rates during the final quarter of 2009.
The Federal Government reduced the first home buyers grant boost from $21,00 to $14,000 on October 1 and lowered it to $7,000 on January 1 this year.
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The Reserve Bank raised the overnight cash rate by 25 basis points to 3.75 per cent on December 1, following similar moves in October and November.
Subquently, the central bank left the cash rate unchanged on February 2.
"It is probably largely due to the departure of the first home buyers, who did all their borrowing and buying in the past months,'' Mr de Garis said.
"When you look at the high levels we had a quarter or so back, we are getting some payback from that due to the stimulus measures.''
Loan approvals for the building of dwellings fell for the second consecutive month, down 6.4 per cent in December, the ABS said.
Demand for mortgages to buy new houses bucked the negative trend, up 3.0 per cent in the month, while loans for investment housing rose 1.9 per cent.
"Investment housing is up, that is suggesting the sector is picking up a little bit of momentum,'' Mr de Garis said.
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