Mortgage applications up 23% in January: RateCity

Home loan applications are up 23% for the first three weeks of January 2012 compared with January 2011, according to RateCity.com.au.

The mortgage comparison website recorded an increase in activity over the past six months and a 41% jump in applications in December 2011 compared with July 2011.

It is unclear though how much of this increased activity is due to borrowers taking out new home loans or existing home owners refinancing their mortgages, as RateCity.com.au is unable to provide a breakdown of home loan applicant types.

RateCity.com.au has attributed the increased activity to lower property prices, two successive interest rate cuts and “aggressive discounting by lenders eager to kick-start the borrowing market”.

It has also noted a return of first-home buyers to the market following RBA data showing that first-home buyers make up one in five (20%) of all mortgages for the first time in almost two years.

Damian Smith, RateCity's CEO, said the mortgage market is finally picking up the pace.

"This year, the mortgage market looks set to recover from the past two years of slower growth," Smith says.

"While we're yet to see the strong numbers of home buyers from five years ago, lenders are likely to see business improving this year as borrowers react to lower prices and interest rates."

Almost 51,000 home loans were financed in November, according to figures from the Australian Bureau of Statistics released last week.

"This is the biggest number of home loans financed recorded by the ABS for two years," says Smith. "The dollar value of these home loans was almost $15 billion in November alone."

According to RateCity.com.au, the lowest rate on a three-year fixed-rate loan is 5.95% offered by non-bank lender HomeStar Finance, which is funded by ING; Deutsche Bank and HSBC.

The lowest standard variable rate loan is offered by non-bank lender State Custodians at 6.22%. NAB’s Ubank is offering a refinancing standard variable loan at 6.14%.