Gloom and doom 'misleading' as 'green shoots' appearing in mortgage market

by Mackenzie McCarty21 Feb 2013

However, he said the number of first home buyers as a percentage of home loans written is an issue that ‘needs to be addressed’.  

“First home buyers as a percentage fell from 18.6% to 14.2% in December. This compares to 20.2% last December (2011) - that is a concern.”

He says the loss of first home buyer incentives in some states has had a decidedly negative effect.

“I don’t subscribe to the notion that the first home buyer grant has an inflationary effect, because it’s been around for a long, long time. I’m sure it’s being assessed at the moment…so there will need to be some action taken.”

Interestingly, Russell says lenders offering competitive new fixed rates has failed to have a serious impact on the aggregator’s business.

“Funding is becoming cheaper and…there’s no doubt about it that the fixed rate options are great, but we’re not seeing a shift in our fixed variable percentage.”

That said, Russell says he’s feeling optimistic for the first time in ‘a number of years’.

“I think there is no doubt that a couple of years ago, when people were talking about ‘green shoots’, it was premature. But, if you look at the dynamics of the housing market at the moment, there are some green shoots appearing. The January capital city housing prices are up for the year-on-year and its pleasing to see the Melbourne price number, while the only one down…was up for the month of January. Housing prices look to have bottomed and are gradually on the way up.”

Furthermore, Russell says consumer sentiment, which has suffered over the past several years, appears to be on the up.

“We’ve had 175 basis points taken off the cash rate and we’re only now seeing consumer sentiment finally take a significant leap forward – the highest for over two years.”

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