Not surprisingly, consumer sentiment fell in November following the Reserve Bank of Australia’s surprise interest rate hike a week ago Tuesday.
In fact the fall was always on, especially after the fall in business conditions and confidence noted on Tuesday in the NAB’s business survey for October.
And the Australian Bureau of Statistics reported yesterday that housing finance approvals rose 1.3% in September.
That rise still left the number of loans down 25% from the previous September and down 21% compared with the average of 2009.
The Westpac Melbourne Institute Index of Consumer Sentiment fell 5.3 in November to 110.7, down from 117.0 in October.
The decline followed the RBA’s decision on November 2 to lift the cash rate from 4.5% to 4.75%.
The survey was done in the wake of that rise, and the bigger 0.45% gouge by the Commonwealth Bank which remains unmatched by its competitors more than a week after the increase.
Westpac chief economist Bill Evans described the fall as "surprisingly resilient".
"We had expected a significantly larger fall in the index given interest rate developments – the Reserve Bank’s 25 basis point increase in the overnight cash rate, which was largely unexpected," he said in a statement yesterday.
Mr Evans compared the decision to other rate rises and pointed out the other banks had yet to announce their rate decisions.
"At the time of the November survey, only one bank had announced its new variable mortgage rate in response to the RBA’s rate hike," he said.
"Consequently, this surprisingly resilient result might be affected by confusion on the part of mortgage borrowers.
"Once the other major banks clarify their policies, which will presumably be before the next survey in early December, there may be a follow up response from households."
The survey also showed big falls in some of its components.
There were big falls in assessments of the 12-month economic outlook (down nearly 10%) and the five-year economic outlook (down 6.4%).
The component measuring respondents’ assessments of their family finances, compared to a year ago, fell 10.2%, while respondents remained marginally optimist on their finances over the next year.
Meanwhile the ABS said the total value of dwelling finance commitments excluding alterations and additions rose 1.0% in September.
The median market forecast was for a 1.2% rise in housing finance commitments in the month, so the market was almost spot on with the 1.3% rise reported yesterday.
The September increase follows a revised 1.1% rise in August (down 1.3% originally).
The value of loans for owner-occupied homes rose 0.6 % to $13.75 billion after seasonal adjustments.
The value of loans for investment homes rose 1.7% to $6.63 billion.
The number of commitments to buy new homes fell 3.2% after seasonally adjusted, while commitments to buy established homes rose 1.6%.
Finance for construction rose 0.5%, the first monthly rise for nearly a year.
The ABS said "In original terms, the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments rose from 15.5% in August 2010 to 15.9% in September 2010. Between August and September 2010, the average loan size for first home buyers fell $3,600 to $279,600.
"The average loan size for all owner occupied housing commitments fell $2,600 to $285,100 for the same period."
