Home loan approvals have risen 1.6 per cent, beating economists' expectations of a 1 per cent rise, as record-low interest rates see a boom in investor housing loans during March.
There were 54,686 approvals in March, compared to 53,811 approvals in February, according to seasonally-adjusted figures released by the Australian Bureau of Statistics on Tuesday.
The value of total housing finance rose 3.5 per cent in the month to $31.62 billion.
The strong figures come after the Reserve Bank board cut the official cash rate at its February board meeting to a, what was then, record-low level of 2.25 per cent, in an attempt to stimulate the economy.
The cash rate has since been lowered another 25 basis points to a fresh low of 2 per cent, to assist the economic transition away from the mining boom.
But the ABS data showed a further slip in the share of first home buyers entering the housing market, as concerns that lower interest rates are encouraging a speculative property bubble, with house prices surging to unaffordable levels.
Investor housing loans were up 6.4 per cent in March, against an increase of 1.6 per cent for owner occupied housing.
The number of first home buy commitments as a percentage of total owner occupied housing finance commitments fell to 14.7 per cent in march from 15.1 in February.
UBS economist Scott Haslem said the home loans data had surpassed expectations.
“Loans are still broadly consistent with ongoing solid house price growth ... and also no longer on a path of further slowing,” Mr Haslem said.
“Looking forward, the RBA’s May rate cut should provide a further boost to demand, and given the likely ongoing strength of housing, we continue to expect the RBA to hold rates at two per cent ahead.”
RBC Capital Markets fixed income and currency strategist Michael Turner said the strong investment reading was a turnaround from earlier in 2015.
He said it looked like investors had not been put off by a reminder from the Australian Prudential Regulation Authority (APRA) on guidelines for prudent mortgage lending practices.
“Relative to at least our expectations, the noises from regulators as of Q1 were perhaps not that influential,” Mr Turner said.