In our report, How To Foolproof Yourself Against Salesmen & Media Bias, we wrote about how the media uses headlines to slip in their bias.

Well, here is a great example from this article in the Sydney Morning Herald (SMH)- Home loans on the rise:

The number of home loans issued to borrowers have marked their first rise in eight months are buyers looked beyond higher interest rates to wade back into the market. In a sign of caution, though, the size of a typical loan shrank.

In an another article from the SMH- Home loans up for first time in eight months:

A WEAK spot in the property market is showing tentative signs of recovery, after a surprise bounce in new lending to home buyers.

The headlines from the Daily Telegraph isn?t much better.

Despite the positive spin in these headlines, there?s a little detail that caught our eye. What is it?

These paragraphs were tucked in Home loans on the rise:

The monthly rise also masked some mixed trends including a surge of refinancing sparked by lower 3-year fixed rate loans, said Westpac senior economist Andrew Hanlan.

Excluding refinancing, the May figure is up only 0.8 per cent, following a 0.1 per cent fall in April, according analysis by Westpac.

Borrowing for owner occupied housing also edged down 0.3 per cent to $13.7 billion, seasonally adjusted.

In other words, most of the ‘rise’ in home loans are due to refinancing. Refinancing basically means ‘closing out’ the existing loan and taking out a new loan. The headline number included the refinanced new loan but does not subtract the old loan that was ‘closed out.’

Arguably, when refinancing increases, it is a sign of financial stress as borrowers tend to refinance themselves out of problems first before trying other options. Although this may or may not be the case for the majority of refinancing, at the very least, the reality is not as positive as what the headline implies.

We shall see.