Housing finance up 2.1% in December, Optus slammed for misleading advertising: Economy roundup

Housing finance commitments increased by 2.1% in December, according to the latest figures from the Australian Bureau of Statistics. The figures show the number of loans given out rose to 51,706 in December, on a seasonally adjusted basis.

The value of loans for owner-occupiers rose by 2.3% to $14.7 billion, with the value of loans for investment homes up by 3% to $6.82 billion. However, the number of commitments to purchase new homes fell by 10.1%, with commitments to purchase established homes rising 3%.

The number of commitments made for building new homes rose by only 1%.

Westpac said in a statement the result was “remarkable”, and that “the positives for housing market have outweighed the negative of higher rates in November – a truly surprising result”.

Federal Court slams Optus slammed for misleading advertising

Telecommunications giant Optus has been slammed by the Federal Court for misleading advertising, after it found that packages promoted as being “unlimited” were not actually unlimited at all.

The ACCC released a statement this morning saying that telco providers must think about the ramifications of their actions when advertising connection packages that don’t deliver as promised.

The Federal Court found that Optus was selling a package of broadband connections that promised “unlimited” downloads. However, these plans stated that once users reached a limit of 15GB or 30GB of downloads, their speeds were drastically reduced.

The ACCC found that at this speed, the broadband service is “practically unusable for popular internet usages including downloading movies and television programs, streaming video and video calls”.

“The existence of the condition was disclosed but only in very small print in the advertisements. No explanation was given by Optus in the advertisements as to the effect that throttling would have on the functionality of the consumer’s user experience,” the ACCC found.

Injunctions imposed by the court will prevent Optus from stating services are “unlimited” when in fact they are not.

“Telecommunications providers should now be in no doubt that the ACCC will take action against them if they engage in misleading advertising. The Competition and Consumer Act 2010 demands truth in advertising and consumers deserve nothing less,” ACCC chair Graeme Samuel said.

Shares open higher after Egyptian unrest eases

The Australian share market has opened higher this morning after unrest eased in Egypt where president Hosni Mubarak announced he would be stepping down immediately.

The benchmark S&P/ASX200 index was up 50 points or 1.03% to 4931.4 at 12.10 AEST, while the Australian dollar also lifted above parity.

AMP shares gained 1.12% to $5.43, as NAB shares rose 1.32% to $26.03. ANZ gained 1.85% to $25.37 as Westpac gained 1.37% to $24.39.

Leighton Holdings drops profit forecast

Leighton Holdings has said it expects full year profit to drop by more than 20%, with first-half profit already falling by 25 to $218.25 million.

The company said revenue grew 5% in the first half to $7.37 billion, but said that cost overruns and the high Australian dollar will result in a lower than usual profit.

“While we have issues to deal with, which we are, Leighton has a record $45.6 billion of work in hand and most of our major markets – Australian infrastructure and resources, and most of Asia – are very positive,” chief executive David Stewart said in a statement.

“We are bringing a rigorous approach to the existing and any new businesses and are focused on reducing costs and increasing margins so as to return Leighton to its historic performance levels.”

Insurance Australia Group profit to fall 50%

Insurance Australia Group has said its first half profit will drop by more than 50%, with the company expecting a full result of about $161 million, down from $329 million in the previous corresponding quarter.

“We have made progress during the period in remediating our operation in the UK, but I’m disappointed to report that bodily injury claim inflation has continued to affect the local industry, and has exceeded our previously held expectations,” chief executive Mike Wilkins said in a statement.