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The mortgage industry remains hopeful that the September rate cut will lead to an upswing in property market activity, but opinion is divided over which borrower segments will move first.
Of the 303 respondents to a recent Mortgage Business straw poll, 35.6 per cent said first home buyer activity would pick up the most.
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This was followed by investors (22.1 per cent) and refinancing activity (21.8 per cent). Only 18.5 per cent of respondents said the rate cut would not positively impact any market segment.
Joe Sirianni, director of Smartline, said September’s rate cut was good news for the industry.
“[It] will certainly help the market, there’s no doubt about that,” he said.
Mr Sirianni said at least three more rate cuts were needed to prompt a major upswing in business, but said he believed 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.
Jason Anderson, senior economist with BIS Shrapnel, agreed that only further rate cuts would spur significant activity in the market, predicting there would be little change 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.”
Troy Phillips, director and co-founder of brokerage FirstPoint NB, said while he was uncertain September’s rate cut would have a huge impact on activity the 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.
Many borrowers would also be looking to take control of their household debt leading to an increase in refinancing activity, he said.
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.
Straw poll
Which market segment will September’s rate cut boost most?
First home buyers: 35.6%
Investors: 22.1%
Refinancing: 21.8%
None: 18.5%
Other: 2%
