Interest Rate Cuts Show Results

The impact of earlier interest rate cuts became evident in August, with a higher than expected rise in home loans.
Home loan borrowing was up 1.8 percent in August, following a one percent fall in July, according the Australian Bureau of Statistics. Economists had expected a rise of 1.5 percent as the effects of earlier rate cuts filtered into the economy.

Better housing affordability - linked to lower mortgage rates - appeared to be supporting demand for home loans, which had in turn lifted auction clearance rates, according to economist Celeste Tay from 4Cast Ltd. But Ms Tay said lingering household caution was likely to see housing demand lift only gradually. That caution was due to domestic uncertainty, in part related to the impending end of the mining boom.
JPMorgan economist Ben Jarman said the overall debt levels of Australian households was a "pretty significant" constraint to further activity in the housing sector.

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