Australia's mortgage performance set to improve

Tuesday 09 October 2012

Article by Mozo

With the Reserve Bank of Australia (RBA) cutting interest rates by a further 25 points last week, there is renewed hope that the country's mortgage market will improve in the near future.

Australia's mortgage performance set to improve

Analysts at Fitch certainly seem to be optimistic about the situation and they believe there will be a noticeable upturn in the third and fourth quarters of the year.

Speaking to Reuters, James Zanesi – a director in the organisation's Structured Finance team – said: "The decision by the RBA to cut cash rates since last November has provided some relief to households and will continue to do so."

So far, none of the country's major banks have passed on the RBA's new rate to their customers in full, although ANZ is expected to make an announcement later this week.

Despite the fact that the other banks have withheld some of the reduction, there is still every chance that house hunters will be persuaded to secure a home loan while the national cash rate is as low as 3.25 per cent.

Fitch confirmed that mortgage delinquencies have already started to fall and this trend could continue throughout the rest of 2012.

The RBA has slashed the national cash rate by 150 points since November 2011 and there is a strong possibility that further readjustments will be made before Christmas.

According to new reports today (October 9th), the pressure is mounting on the RBA to make another cut in November, as levels of unemployment are starting to creep up again.

Indeed, the News Limited Network has suggested that jobless figures could rise above the six per cent mark for the first time in three years.

Macquarie Bank senior economist Brian Redican told the news provider that small businesses are struggling and more people could find themselves out of work in 2013 unless things improve.

Although the overall economic situation appears bleak, this could be a good time for property hunters who have saved up enough cash for a healthy deposit to take advantage of falling rates and sign up for a home loan.

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