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Home loan approvals fall to lowest levels since 2001

The number of home loans approved in February fell at a greater rate than expected as the effects of the November rate hike started to hit households. The number of home loans approved in February fell 5.6 per cent, to a seasonally adjusted 45,393, data from the Australian bureau of Statistics showed. It's the lowest number of home loans approved in a month since February 2001. And home loans in New South Wales plummeted 10.1 per cent in seasonally adjusted terms, the most since February 1997, Fairfax newspapers reported. They said the November interest rate hike by the Reserve Bank was part of the reason for the fall as households are now facing higher interest rates, which will weigh in on demand. Housing finance commitments had been improving but off very low levels, so it is expected that this is not a change in the trend but a continued softness in the market with market activity remaining to be subdued. A the reporters said that  the Reserve Bank doesn't want to see housing market activity and consumer spending surging away any time too soon while the mining is still strong. A Westpac senior economist said the figures suggested Queensland was yet to recover from recent sever weather events. "What we're seeing is some continuing impact from the flood disruptions and also delayed reaction to the November interest rate rise," he said. "We'd expect a recovery (in Queensland) in the next couple of months." While the headline figure may have disappointed the market, the details were not so weak, Mr Hanlan said. "New lending (excluding refinancing deals) was only down 3.8 per cent and finance for construction of new dwellings was up 1 per cent."

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