“The year ahead looks quite promising with the likelihood of interest
rates continuing to head down and lender risk appetites growing,” Mr
Smith said.

“The Melbourne Cup day rate cut by the Reserve Bank of Australia
(RBA) was a turning point for the market and the follow up December
reduction will help boost activity over the summer.

“The economic forecasters expect the RBA may have to cut again early in the New Year, which will be a relief for borrowers.”

Mr Smith said 2011 had been one of the more difficult years for the home finance sector in decades.

“The natural disasters in Queensland at the start of the year created
some havoc in the market place as activity stalled while communities in
both states focused on recovering from adversity,” he said.

“We saw many months of subdued consumer confidence as the carbon tax heightened the concerns over costs of living.”

“There was a lot of speculation in mid-2011 about the RBA raising
interest rates to combat rising inflation. But the financial situation
in Europe and the United States eventually saw the RBA change course to
try and boost consumer sentiment in Australia’s two speed economy.”

Mr Smith said despite uncertainty about the impact of measures to
tackle the European debt crisis and how it will affect the funding
capacity of the Australian banking sector, consumers are more upbeat
than they were earlier in 2011.

“The fundaments of the Australian economy remain quite strong and
there are plenty of opportunities for the service, manufacturing and
primary sectors to grow and succeed in 2012.”

Paul Smith