The low interest rate environment has been taken advantage of by the mortgage holders in Australia and are choosing to use this opportunity to refinance their existing mortgages
The Australian Banking Association figures shows 500,000 home loans, or 8 percent of all mortgages, have been refinanced in the past year
New housing finance in September rose 5.9 percent compared with the previous corresponding period as showing in the Australian Bureau of statistics
The influx in lending activities was driven by lower lending interest rates, with peak refinancing activity occurring in May, says ABA chief executive Anna Bligh.
“The number of homeowners locking in a better deal on their mortgage is among the highest it’s ever been,” Ms. Bligh said.
“This data shows that lower interest rates on mortgages are driving significant movement in the home loan market.”
Ms. Bligh also said that new loan commitments were back above pre-pandemic levels.
The ABS said the federal governments’ Home Builder grant was fueling a larger rise in loan commitments for new dwellings, which increased 25.3 percent.
“Owner-occupier housing loan commitments are at historically high levels, consistent with low interest rates and government incentives,” ABS head of finance and wealth Amanda Seneviratne said.
“For example, it is likely that the Home Builder grant is contributing to increased demand for construction loans.”
The Reserve Bank of Australia’s lending activity influenced the current low interest rate environment as an emergency relief following the onset of the coronavirus pandemic. Which lead to business construction loans that soared up to 57.2 percent compared to the previous month.
On Tuesday, the RBA is tipped to cut interest rates to 10 basis points to further help the financial sector provide cheaper lending rates to households and businesses.
In the daily charts of AUD/USD, the pair edged lower early Monday morning in Sydney Session.
The AUD/USD pair edged down to 0.13% to 0.7017.
As what we can see in the daily charts in AUD/USD, the pair broke down the 0.70098 support level early morning but was able to pull back later in the Sydney Session.
The uncertainty of the U.S. dollar volatility brought by the upcoming election due tomorrow will leave retail traders questioning the market sentiments and making a solid decision on which trade to take will be hard.
What we can watch out for now is the breaking down of the pair from the support level to further confirm a sell-off by the AUD. If it will be further resisted on this level, it may trade back up to the support level 0.72431 and may bounce off this area for quite a while.
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