Good news again for the housing market as ABS figures from December show another rise well above that expected by economists. But there is a warning: it could mean more people present with a bad credit report as confidence returns.
By Graham Doessel founder and CEO of MyCRA Credit Repairs and www.fixmybadcredit.com.au.
ABS Data shows December housing-finance approvals in Australia rose a seasonally adjusted 2.3 per cent in December 2011 from November. Economists expected a rise of around 1.8 per cent in December.
DECEMBER KEY POINTS FROM ABS BELOW:
VALUE OF DWELLING COMMITMENTS
December 2011 compared with November 2011:
The trend estimate for the total value of dwelling finance commitments excluding alterations and additions rose 0.8%. Investment housing commitments rose 0.9% and owner occupied housing commitments rose 0.7%.
In seasonally adjusted terms, the total value of dwelling finance commitments excluding alterations and additions rose 3.8%.
NUMBER OF DWELLING COMMITMENTS
December 2011 compared with November 2011:
In trend terms, the number of commitments for owner occupied housing finance rose 1.1%.
In trend terms, the number of commitments for the purchase of established dwellings rose 1.2% and the number of commitments for the purchase of new dwellings rose 0.7%, while the number of commitments for the construction of dwellings fell 0.1%.
In seasonally adjusted terms, the number of commitments for owner occupied housing finance rose 2.3%.
In original terms, the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments rose to 20.9% in December 2011 from 20.0% in November 2011.
Ninemsn reports interest rate cuts in November and December and the widespread expectation of more to come might have contributed to better figures for December. The article says the December figures mark a two-year high for housing finance figures and cast doubt over a March interest rate cut.
“In any case, lending has picked up.
And, given that the RBA keeps close tabs on bank activity, it is possible that the strength in lending in December figured in the decision on February 7 to keep the cash rate steady.
For this indicator, the question now is whether the February decision took some of the heat out of demand for loans.
The earliest indications of that will not be available until the February housing finance figures are released by the ABS on April 11.
In the absence of any sign of a subsequent waning in loan demand, the December housing finance numbers constitute an early goal scored by the ‘no rate cut’ team.
Still, there are plenty of economic data releases between now and the next RBA policy meeting on March 6, so the market is not rushing to make a judgment,” the article says.
Could this new rise in figures be slowed by the RBA’s decision to leave interest rates in February? Bank lending criteria may still be tight with these questions still looming over the future of housing finance and market confidence, and of course a myriad of global factors.
In the meantime, it will still be essential for borrowers to present with a clean credit file to ensure finance approval. For those who are living with credit file errors and inconsistencies, there is a solution.
How many people could be living with credit file defaults that shouldn’t be?
Recently Channel 7′s Today Tonight interviewed Veda Advantage’s Head of External Relations, Chris Gration on the possible number of errors on credit reports. He admitted errors within their system alone amounted to 1%.
“We give out about 250,000 credit reports to consumers every year. But only in 1 per cent of cases is there a material error on the file, so a default or an enquiry that’s incorrect,” Mr Gration told Today Tonight.
With 14.6 million Australian Veda Advantage credit files alone 1 per cent of errors amounts to 140,000 Australians’ financial lives potentially in ruins through no fault of their own.
A small scale study conducted in 2004 by the Australian Consumer Association (now Choice Magazine) revealed about 30% of credit files were likely to contain errors.
Transferring those figures from the Choice study to the number of credit files in Australia today, could take the figures to over 4 million errors, inconsistencies or flaws.
We feel based on the ACA study and the Choice survey that the real figure across the board is likely to be in the middle somewhere – much higher than 1%.
Under current credit reporting legislation, it is up to the consumer to check for errors. Credit file holders are able to obtain a copy of their credit report from one or more of Australia’s credit reporting agencies for free every 12 months.
Unfortunately consumers are often not aware across the board of their responsibility to check the accuracy of their own credit file, so many errors go undetected.
Errors do occur, but often people aren’t aware of they have an adverse listing on their credit file until they apply for a loan, but by then it is too late to correct errors and they are generally refused credit or forced to take on non-conforming loans at sky-high interest rates to secure the home.
When disputing any adverse listing, it is up to the credit file holder to provide reason as to why the creditor has not complied with legislation.
Unfortunately many people find this process difficult at best – negotiating with creditors is not always easy for the individual to undertake. Our job as credit repairers is to check the creditor’s process of listing defaults for legislative and or compliance errors, any such errors could deem the credit file default listing unlawful, at which time we advise the creditor to remove the default.
If potential borrowers need help with credit repair, they can contact us at MyCRA Credit Repairs on 1300 667 218 or visit the main website www.mycra.com.au.