How Are Economic Indicators Showing Up These Days?

Cheap Credit Availability For Home Buyers; Job Seekers To Cheer Over Recent Vacancy Data

As per the media reports, Macquarie Bank & ME Bank will reduce fixed-term rates by ~60 bps for home buyers. This will bring the borrowing rate well below the benchmark of 4%. The major reason behind this change is the fall in long term interest rates, which is supported by the fact that the Australian 10-year bond yield was reported at 1.73% on March 29, 2019, which is a fresh low.

Other lenders would also be announcing rate cuts up to 50 bps on Monday, April 1, 2019, including online lender, ING and ME bank, which is owned by 26 industry funds.

As the Australian Central Bank cut the cash rate from a record low 1.5%, it is expected that the floating rate will follow suit. The future market predicts that there may be one or two interest rate cuts this year.

There is fear among bankers and mortgage brokers that strict lending criteria by regulators may counterbalance the recovery expected in the residential property markets, especially in popular cities such as Melbourne and Sydney. The residential borrowers are expected to go through stricter guidelines to qualify for the loan grants, and therefore, may act negatively despite lower payment funding availability.

However, many experts have expressed their views that the cheap credit would outweigh bank scrutiny.

ME Bank, ANZ and Westpac Group, in order to attract first time buyers and investors, are also repricing their products and improving terms and conditions for easy loan accessibility.

As per the Australian Bureau of Statistics (ABS), the number of job vacancies (public and private) have surged by 1.1% in February quarter, and by 9.2% if compared to the previous year (February 2018).

ABS’ Chief Economists, Mr. Bruce Hockman pointed that the job vacancies continued to grow at a slower pace compared to the year 2018. It is supported by the fact that the quarterly trend of job vacancies exhibited a growth of 1.1%, well below 5.2% as observed a year ago.

As per the trend estimates, job vacancies in February 2019 was reported at 244.9k, which comprised of 223.5k vacancies in the private sector and 21.4 K vacancies in the public sector. The private sector observed an increase of 1.1% (Q-o-Q) and 9.2% annually and the public sector observed a rise of 0.8% (Q-o-Q) and 9.4% annually.

Sectors that witnessed an increase in job vacancies as compared to previous quarter are manufacturing, electricity, gas, water and waste services, construction, accommodation and food services, financial and insurance services, professional, scientific and technical services, education and training, health care and social assistance, and arts and recreation services.

Sectors that witnessed saw a decrease in job vacancies on a quarterly basis are mining, wholesale trade, retail trade, information media and telecommunications, rental, hiring and real estate services, administrative and support services, public administration and safety, and other services.

States and territories that experienced an increase in job vacancies on a quarterly basis are New South Wales and the Australian Capital Territory. Other states and territories such as Victoria, Queensland, Western Australia and Northern Territory experienced a decrease in quarterly job vacancies. There was no change in the quarterly job vacancies for South Australia and Tasmania.


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