Rate relief is nice, but more is needed says broker
INTEREST rate relief from the Reserve Bank of Australia (RBA) this year has boosted investor confidence and stimulated new dwelling finance but more cuts are still needed, says mortgage broker network 1300HomeLoan.
Managing director John Kolenda said the ABS housing finance figures for October, 2012, highlighted growing volumes in investment loans and the purchase of new dwellings.
But the ABS data found home loans for owner-occupiers rose just 0.1 per cent in October, seasonally adjusted, with gains driven mainly by new dwellings and investors.
"While we continue to see a mixed bag for the home finance sector, there's been an encouraging recovery for loans for the purchase of a new dwelling which rose 4.2% in October, 2012," Mr Kolenda said.
"This was the fifth consecutive rise of 4% or more for new dwelling loans.
"Although the number of loans for construction is back to its lowest level since January this year falling 0.9%, lower interest rates appear to be buoying investor confidence with investor loans up 5.5% in October.
"Changes to first home owner grants favouring new homes in some states and territories have stimulated the activity in new dwelling finance.
"But first home buyers overall are not rushing back to the market despite lower interest rates.
"They make up 18.7% of the market compared to the peak of 31.4% in May, 2009, when there was a combination of near record low interest rates and boosted federal government incentives for first time buyers."
Mr Kolenda said Australian consumers remained cautious despite the RBA lowering its cash rate by 125 basis points to 3% during 2012.
"While some sectors of the home finance market are on the improve, we're a long way from being out of the woods and it's going to take even more stimulus and more rate cuts to change that sentiment," he said.