Housing Finance data released by the Australian Bureau of Statistics this morning highlights once again that monetary policy and generationally low home loan rates are working as expected.
The data from the ABS showed that while the number of home loan commitments (owner occupiers) were unchanged in January against market expectations of a rise of 0.5%, construction loans were up 5.8% to be 22.1% higher year on year.
Construction is important at helping employ the workers who are no longer required as the Capex and Mining Boom filters out of the economy.
So this is good news but the recent NAB Business survey and today’s Westpac consumer sentiment survey suggest that monetary policy is gaining traction in a much narrower section of the economy than perhaps Q4 GDP or the recent strength in retail sales has suggested.
The hope is that monetary policy’s effects spread throughout the economy over time – right now, it’s a conundrum for forecasters but one which highlights again why the RBA is on hold for a while to come.