Consumers seeking more rate relief

Consumers are still seeking more interest rate relief despite the back-to-back cuts in the official rate by the Reserve Bank of Australia (RBA), according to mortgage broker Loan Market. Loan Market corporate spokesman Paul Smith said home loan inquiries had only risen moderately since the RBA lowered its cash rate on May 1 by a half percentage point to 3.75 per cent and then by another 25 basis points on June 5 to 3.5 per cent. Mr Smith said consumers remained cautious and they would welcome further stimulus from the RBA, which still had plenty of room to move. ‘‘Consumers are still hesitant despite the RBA’s rate cuts, which have not been passed on in full by most lenders,’’ he said. ‘‘Our own inquiries have risen by only about 5 per cent with most activity on the days when lenders made their interest rate announcements. ‘‘But any spikes in activity haven’t been sustained and the signs are that consumers are uncertain about the European debt crisis and the direction of the domestic economy and they are hoping for more rate cuts.’’ Mr Smith said while further rate cuts were desirable, home loan customers did not necessarily have to wait for more action from the RBA as the current competitive lending environment enabled them to try and strike a better deal on their mortgage. ‘‘There’s understandably some uncertainty in the minds of Australians towards the direction of the economy, however those who are looking to save money on their home loan should take advantage of interest rates while they trend downwards,’’ he said. ‘‘Borrowers can achieve significant savings by shopping around and seeing if they can get a more competitive home loan package. ‘‘And often borrowers who make noises about switching lenders achieve a favourable response from the banking retention teams. ‘‘Market conditions are currently in the buyer’s favour and a mortgage broker is ideally placed to take a client’s interest to the market and negotiate home loan options between lenders.’’ A recent Mortgage and Finance Association of Australia (MFAA) study showed 43 per cent of all home loans were now written by a mortgage broker and many in the industry suggested it will rise to 50 per cent in the coming years.