Mortgage Choice, Australia’s leading
mortgage broker, responds to the housing figures released today by calling on the federal government to abandon its plans to introduce tax cuts in July. At the same time the nationwide franchisor strongly advocates a pause on interest rate increases.
Mortgage Choice Managing Director, Paul Lahiff said, "the growth in the value of owner occupied by a modest 1.7%, on a seasonally adjusted basis for January 2008, has occurred despite the August and November cash rate increases by the Reserve Bank of Australia, which were designed to subdue demand”.
“With further rate increases in February and March 2008 squeezing the budgets of
Australian mortgage holders, the Reserve Bank and the federal government must realise we need a pause on monetary policy and must use fiscal policy to dampen growth in inflation.
"The four recent official interest rate increases have added an additional $170 per month in repayments to an average mortgage of $250,000, and this does not factor in the further increases applied by various lenders in this period.
“While there is no doubt that the promised tax cuts will provide some short term relief to families with mortgages, they are inflationary and will inevitably lead to another round of official interest rate increases. Indeed some forecasters believe that an increase in official interest rates of 0.5% would be needed to offset the tax cuts.
Finance for owner-occupied housing rose by 1.7% in January in seasonally adjusted terms, while investment housing – fixed loans rose by 8.3%.
“First home buyer commitments, expressed as a percentage of all owner-occupied dwellings financed, fell in January from 18.4% to 18%. In a sector of the market where housing affordability is an issue, this is a worrying sign,” Mr Lahiff said.
"The further cash rate rise of 0.25% announced in March 2008 by the Reserve Bank, together with market led rate increases by some the majors, should start to moderate growth in the
housing finance market, particularly among first home buyers".
Now is the time for the RBA to pause for breath, with a return to fiscal policy and an abandonment of tax cuts.
About Mortgage Choice Mortgage Choice is Australia’s leading mortgage broker. It provides
professional home loan advice on, and choice of, products offered by an extensive panel of Australia’s leading lending institutions and its accredited
loan consultants do not charge customers for their services. Mortgage Choice does not have its own products, and consultants are paid the same commission regardless of the lender or product chosen by the borrower#.
Through its national network of over 449 franchises and 678 loan consultants supported by Group and State Offices, Mortgage Choice writes almost 1 in every 20 Australian residential loans.
The company was listed on the Australian Stock Exchange in August 2004 (ASX sign: MOC).
Recent awards/recognition: 2008, 2006 and 2005 MFAA Awards Retail Mortgage Broker of the Year; 2008 MFAA Awards Operator of the Year; 2007 Lending Central Awards Mortgage Broker of the Year; 2007 Franchise Council of Australia Excellence in Franchising Awards Franchisor of the Year finalist; 2007, 2005 and 2004 Australian Banking & Finance Awards Best Mortgage Broker; 2006 BRW Magazine Top 500 Public Companies list; and 2005 Australian Mortgage Awards Best Branding and Most Effective Internet Presence.
17-Mar-2008