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Investors, first homebuyers could lead market recovery

Staff Reporter 3 minute read

The mortgage industry remains hopeful that the September rate cut could prompt an upswing in activity though the jury is split as to which borrower segments will move first.

Of the 303 respondents to a recent Mortgage Busniess straw poll, 35.6 per cent said first home buyer activity would pick up the most.

This was followed by investors (22.6 per cent) and refinancing activity (21.8 per cent).

Only 18.5 per cent said the rate cut would have no positive impact on any market segment.

While few expect volumes to boom in the near future in any market segments, there was cautious optimism that the rate cut would spur some activity. Joe Sirianni, director of Smartline, said September’s rate cut was undoubtedly good news for the industry.


“This month’s rate cut will certainly help the market, there’s no doubt about that,” he said.

While Mr Sirianni said that at least three more cuts were needed to prompt a major upswing in business, he said that current market fundamentals could favour investors.

“With the stock market having fallen off, and minimal vacancies driving strong rental returns, astute investors are likely to see this as a good time to buy,” he said.

Troy Phillips, director and co-founder of brokerage FirstPoint NB, said he wasn’t certain September’s rate cut would have a huge impact on activity but said outlook for the first homebuyer market was improving.

“If rents keep going up like they are, I think we’ll see more first homebuyers looking to buy,” he said.

Mr Phillips said a lot of borrowers would also be looking to take control of their household debt, pointing to a likely increase in refinancing activity.

BIS Shrapnel, however, painted a less optimistic picture.

Jason Anderson, senior economist with BIS Shrapnel, said there would be little market activity until at least early 2009.

“We really need three to four rates cuts before we see any big change,” he said.

“Even if we do see another rate cut this year – although this is more likely to occur in February or March – it is unlikely we will see any real pick up before the March quarter next year.”

Mr Anderson said any recovery in the markets would start in the nation’s capital cities, with empty nesters driving activity.

“A market recovery usually starts close to the CBD and works its way out. With most CBD markets currently very tight, and demand very strong, I would expect activity to pick up in inner city markets first,” he said.

“Empty nesters are most likely to lead the way, given they are less sensitive to interest rate pressures.”

Published: 18-09-08

Do you agree with the results of this poll? How many more rate cuts do you think are needed to prompt activity? COMMENT HERE

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