Glimmer of old normal in January sales

by Adam Smith03 Feb 2012

Mortgage sales in January could mark a return to normal, with figures high above last year.

AFG has released its Mortgage Index for January, and the data shows a 40% increase on last year's numbers. The company called the results a "return to more normal trading levels".

First homebuyer participation remained steady for the month, but WA overtook NSW as the most active first home buyer market at 19.1%. NSW saw a rush of first homebuyers through the second half of last year as borrowers endeavoured to beat the state's deadline for stamp duty changes.

NSW did lead the way in investor activity. Investors accounted for 40% of loans in NSW, compared to around 36% nationwide.

While the figures were significantly up on last year's flood-ravaged January, AFG general manager of sales and operations Mark Hewitt theorised that many borrowers were biding their time until after next week's RBA meeting.

"While markets across the country have recovered from last year’s natural disasters, right now we have a strong sense that borrowers are playing wait and see on rates. Will the RBA cut rates, and if so, how much of this will be passed on by lenders? It seems that we are moving to a new paradigm where there is less and less linkage between the cash rate and mortgage rates. An RBA cash rate cut will not automatically translate into improved consumer confidence," Hewitt said.

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