The September rate clearly boosted borrower confidence as mortgage sales surged 10.2 per cent last month according to the latest figures released by AFG.

Queensland saw the biggest increase, up 17.9 per cent on August. New South Wales also showed strong recovery with a 16.1 per cent rise on the previous month.

Malcolm Watkins, executive director of AFG believed the September bounce was partly attributed to slower August activity as borrowers waited for the RBA to deliver last month’s anticipated cut.

He also urged the RBA to cut the official cash rate by a further 0.5 per cent in October and to ramp up its investment in AAA rated RMBS.

“While it’s a good start to alleviate liquidity, the $4b is less than two month’s worth of mortgage sales by our company – and we’re only one of many participants”.