Aussie mortgage approvals drop to 10-year low

Mortgage approvals in Australia unexpectedly fell in March to its lowest in over 10 years, as higher rates lured buyers away from the mortgage market, according to a Business Times report.

The number of mortgages granted to borrowers dropped 1.5 percent to 44,968 in March, from the 4.7 percent revised forecast in the previous month, according to the statistics bureau in Australia.

“Higher interest rates in coming months will keep demand and price growth in check,” said Matthew Circosta, an economist at Moody's Analytics in Sydney.

Glenn Stevens, Governor of the Reserve Bank of Australia, set the benchmark rate at 4.75 percent in May, after increasing borrowing costs seven times from October 2009 to November 2010, in order to prevent a property bubble.

Meanwhile, loan value dropped 0.1 percent to A$19.3 billion (S$25.4 billion) in March, with the lending value of owner-occupiers falling to 1.1 percent.

The data also showed that first-time home buyers accounted for 16 percent of the total mortgages approved in March, up from 14.9 percent in the preceding months and lower than the 16.4 percent in the previous year.

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