Australian Property News

Interest rate cut sees more borrowers enter the market

Posted on Friday, December 02 2011 at 4:27 PM

The Reserve Bank of Australia’s decision to cut interest rates by 25 basis points in November has had a positive impact on the market, according to mortgage broker company Australian Finance Group (AFG).

The number of mortgages processed increased by 18.4 per cent over October and AFG processed more than $2.9 billion of mortgages in November, its highest figure since March 2009.

Growth was particularly strong in Victoria, where mortgages processed leapt 26.7 per cent and also in Queensland (20 per cent).

General manager of sales and operations, Mark Hewitt, says the rate cut obviously stimulated demand.

“We’re experiencing the paradox that weaker global economic conditions and lower rates is good news for Australian property buyers, at least for now,” Hewitt says.

“It’s significant that investors and first homebuyers are leading the action. Many had been fearful that we were locked into a scenario of constant rate hikes. The November rate cut proved to be a real turning point and the outlook is very different now.”

Investors accounted for about 38 per cent of all mortgages organised in November, which is the highest percentage in six years. They were especially active in New South Wales (44 per cent) and Victoria (40 per cent), but also strong in Queensland (37 per cent), Western Australia (32 per cent) and South Australia (30 per cent).