The most recent interest rate hike of November by the Reserve Bank began hitting households as became obvious in February based on home loan approval numbers. The number of home loans approved in February fell at unexpectedly high rates – a 5.6% decrease according to the Australian Bureau of Statistics. The number of home loan approvals hasn’t been this low in a month since February of 2001. Previously, economists had predicted that home loan approvals would fall about 1.5%.

With households facing the Reserve Bank’s higher interest rates, less are looking to purchase homes. Those who do want to purchase are searching in vain for “no deposit” mortgage products, which simply don’t exist anymore, according to mortgage broker Loan Market. Internet searches containing “no deposit loans” increased 28% since the start of 2011. Experian Hitwise, a global online competitive intelligence service, examined similar web traffic and reports a 57% increase in no deposit loan searches. First-time homebuyers want to borrow the full cost of the property to get into a new home, but unfortunately these mortgages were the first to go when the global financial crisis hit.

Senior economist, Andrew Hanlan of Westpac indicates the lower figures for home loan approvals suggest that Queensland has not recovered from the recent flooding and severe weather. The flood has disrupted and impacted the housing market – but he also feels the interest rate hikes from November caused a delayed reaction. He’s expecting to see financial recovery and an improved home market in Queensland within the next few months.

In New South Wales, home loan approvals hit an all time low since February of 1997, according to Fairfax newspapers, with a 10.1% drop. Victoria fell 4.6%. Both New South Wales and Victoria had experienced resilience to financial changes in 2010, but it seems to have caught up with them, now.

Buyers Market in Melbourne

Late last year, Melbourne sellers were in the glory with the median home price at $601,000. The property bubble has burst however, and the median home price has fallen $36,000 to $565,000. This is a 6% drop and the largest recorded by the Real Estate Institute of Victoria in nearly two years.

For buyers looking to best places to buy in australia, Melbourne’s prices may lead buyers in that direction. The seven successive interest rate hikes turned many buyers away from home buying, as indicated by the drop in home loan approvals, but certain areas will continue to outperform others. Despite the current drop in Melbourne home prices, it’s still the second most expensive city to live in the country, behind Sydney.

Big Mortgage Broker Reports 20% Drop in Home Loans

Aussie Home Loans reports new home loan approvals dropping 20% in the last four months. Normally, the big mortgage broker maintains about 5% of the Australian housing market share, and through December of 2010, settled about $1 billion in home loans each month, but they’ve dropped 20%.

It iss considered a buyers market around most of the country, especially for properties priced above $700,000. Aussie Home Loans managing director, John Symond, thinks the housing market of Australia has past the peak and will soften considerably over the next six months and is best to buy real estate in australia.

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