More RBA Action Needed Despite Mine State Growth

The home finance market has grown almost five per cent over the past year with mining statesWestern Australia and Queensland leading the recovery, according to leading mortgage broker Priority Lending.

Priority Lending corporate spokesperson Paul Smith said the latest Australian Bureau of Statistics (ABS) figures for May, 2012, show a 1.2 per cent fall in the number of home loan approvals from April, 2012.

But Mr Smith said nationally, according to the ABS, there was a 4.46 per cent rise compared to May 2011 with Tasmania and South Australia being the only two states or territories to record falls.

He said WA improved 16.37 percent andQueensland 11.68 per cent, compared to May 2011.

“While it’s encouraging to see recovery in these two states, the base numbers from May last year were near record lows and the only place they could go was up,” he said.

Mr Smith said the growth in mining states, WA andQueensland, was further evidence of the two speed national economy.

He said the underwhelming results nationwide compared to April reflect a muted response from consumers to the RBA cutting its cash rate in May from 4.25 per cent to 3.75 per cent.

“The first rate cut in early May clearly did not influence the market, however the second rate cut in June should impact the ABS number we see in July and August,” he said.

“While the RBA stayed on the sidelines in July, the RBA will be keeping a close eye on the figures that come out in the next two months to gauge the impact rate cuts have had for the home loans industry.

“Priority Lending surveys have shown strong support for further rate reductions as some consumers did not believe the previous cuts had made much difference to them – especially as they haven’t been passed on in full by most lenders.”

Source: Priority Lending