The Australian dollar advanced after news that bank lending strengthened in April and May. The Aussie dollar was at 85.21 U.S. cents as of 2:28 p.m. in Sydney, from 84.87 cents yesterday.

Loans to consumers to buy houses increased 0.7 percent from April, according to the Reserve Bank of Australia in Sydney today. Bank lending by Australian banks and other finance companies significantly rose by 0.5 percent in April.

This takes into account that consumers have adjusted to the interest rate increases implemented earlier.

According to an RP Data-Rismark index released today, house prices across Australia's largest cities rose a seasonally adjusted 0.5 percent in May, which has an impact in the median price to A$468,000 ($397,000) for an annual gain of 12.1.

Rod Cornish, head of property research at Macquarie Group Ltd. in Sydney told Bloomberg: "Housing finance to investors has picked up. We've already seen significant growth in the first half, he said. "That's already locked in, and we'll see more moderate growth in the second half."

Cornish added that higher borrowing costs are prompting some home buyers to revise investment plans. Sales of newly built dwellings fell 6.4 percent in May from April, a separate report published today by the Canberra-based Housing Industry Association showed.