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Home Loan approvals are seriously down in fact for some states the numbers are at their lowest for over 14 years.

The number of home loans approved in February declined yet again by 5.6 per cent, to a seasonally adjusted 45,393.

This represents lowest number of home loans approved in a month since February 2001.

Home loans in New South Wales have suffered the biggest drop of 10.1 per cent in seasonally adjusted terms, the most significant since February 1997.
While economists did forecast a drop in demand for February it was not expected to be as great as it eventuated.

There were expectation that home loan demand would be impacted on the back of the Queensland floods however the figures published suggest that the decline is a lot broader than just in the flood affected areas. It is likely that in February borrowers were still recovering from the interest rate hikes in November.

New home loans (excluding mortgage refinances) saw a drop of 3.8 per cent while construction loans for new dwellings were up 1 per cent.

The Reserve Bank (RBA) would be concerned with falls in housing finance in NSW and Victoria for the month, which dropped 10.1 per cent and 4.6 per cent respectively, the said.

Both these states had shown a lot of resilience during last year and RBA will be surprised by these figures.

Based on recent statistics from the Real Estate Institute of Australia, Australia’s average mortgage size is increasing in line with increases to property prices.

It seems that the weighted average capital city property price grew by 2.4 per cent over the last quarter to a quite significant -  $545,873.

Other than Perth and Canberra,most capital cities across Australia have notched up increases in median house prices over the quarter. Sydney, Melbourne and Darwin recorded the highest median house prices while the lowest were shown in Hobart, Adelaide and Brisbane.

Melbourne house prices recorded the largest increase over the quarter; up 6.9 per cent to $601,500, while Perth recorded the largest drop – down 1.8 per cent to $480,000.

Darwin recorded the most significant jump in other dwelling prices over the quarter, increasing 6.4 per cent to $438,000, while Canberra recorded a decrease of 2.3 per cent – the largest decrease compared to other capital cities.

Naturally with property prices going up, the size of an average of Australian home loans will also increase accordingly.

A recent survey by RaboDirect  has identified that almost one in two Australian households will still be paying off their mortgage in retirement.

Half the survey respondents believe that they will be older than 60 before they finish paying their home loan.

The survey by RaboDirect, a subsidiary company of Rabobank Australia, questioned people about their beliefs and behaviour towards debt and savings.

Survey results have shown that a large number of Australians have a rather basic  level of understanding of many financial services and products.

About half the people surveyed did not understand the difference between a savings account and a transaction account.