A drop in lending for housing in February makes a rate cut later in the year more plausible, economists believe.
The figures from the Australian Bureau of Statistics (ABS) showed the value of lending for housing fell by $1.638 billion (7.1 per cent) in seasonally adjusted terms to $21.50 billion in February.That more than offset the $952 million (4.2 per cent) rise in January and pushed the value of lending to its lowest level since March last year.
Within the total, lending to investors fell by $685 million (9.5 per cent) to $6.553 billion, following a $587 million rise.
Lending to homebuyers was down by $952 million (6.0 per cent) at $14.95 billion, reversing a $365 million rise in January.
The impact of the interest rate rises early this year - both the independent rises announced by banks in January and those prompted by the official rate rise by the Reserve Bank of Australia (RBA) early in February - can be seen in these figures.
The share market was having a difficult run at the time, which may have sapped confidence as well.
Whatever the cause, the waning of demand for housing loans, from both investors and homebuyers, takes some inflationary pressure out of the economy.
As such the case for any further rate hikes this year has just about fully disintegrated, especially as these figures predate the more recent rate rise by the RBA in early March.
The negative impact of the tighter monetary conditions might turn out to be more severe than the RBA hoped - only time till tell.
But these figures add weight to the view that the balance of probabilities has shifted to the downside as far as the next official move by the RBA is concerned.
