One of the market's largest aggregators has said that major bank rate cuts should be 'meaningful' or risk a continued market stagnation.
Australian Finance Group released mortgage processing figures for April yesterday which it said exposed the present vulnerability of the home loan market.
While acknowledging April is traditionally a quiter month for borrowers as they enjoyed Easter and school holiday breaks, AFG said April contrasted with the previous two much stronger months.
AFG saw loans processed decrease by 22.4% from $2.9bn in March to $2.2bn in April, which put its volumes 7% higher than the figures recorded in April last year.
However, AFG said in context demand was subdued, and that the high proportion of fixed rates - at 21% of all loans, down from 25.4% a month earlier - was a further sign of consumer nervousness.
AFG's general manager of sales and operations Mark Hewitt said the group had signalled the fragility of the market for some months, and April saw even more borrowers adopting a 'wait and see' position.
"There has been so much negative commentary that a confidence boosting RBA rate cut had become urgently needed," Hewitt said.
He urged lenders to pass on as much of the rate cut to consumers as possible, to stimulate demand.
"Lenders must pass on a meaningful proportion of this cut if they wish to see demand for home loans improve significantly," he said.
AFG's processing volumes showed investor activity soared to 44.4% of all new loans in that state, up from an already high 40.1% in the month before.