Home loan demand falls in January

The demand for home loans fell last month as a result of three official interest rate rises and the removal of the federal government’s first homeowners’ grant, a mortgage broker has found.

Loan Market Group said that its home loan approvals dropped by 40 per cent from a peak in 2009, the Australian Associated Press reported.

This meant that January was the company’s quietest month since 2006.
With most economists expecting another 25 basis point increase in official rates this week, the Reserve Bank of Australia (RBA) made the surprising decision to keep the cash rate at 3.75 per cent.

Dean Rushton, chief operating officer of the Loan Market Group, said that a concern for consumers was whether the major banks would break ranks from the RBA and implement their own interest rate rises. Such developments might encourage more customers to compare home loans.

This week the Herald Sun reported that Resimac, the wholesale mortgage funder, is set to launch a new retail lending business for home borrowers.

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