Home prices will see a modest improvement as consumers remain conservative about their level of indebtedness, Westpac and NAB forecast.

‘‘We’re not looking for another huge surge in prices or activity that we saw in, say 2009, or that we saw in 2001,’’ Bill Evans, chief economist at Westpac, said at the Bloomberg Australia Economic Summit in Sydney today. ‘‘The housing market will improve but it won’t improve to the point that people are becoming over-leveraged or we’d start to see real issues in our loan book.’’

Home prices in state and territory capitals have climbed 4.7 per cent from their lowest point in May, according to RP Data. That compares with a 11.1 per cent surge in 2009, partly driven by government measures to boost demand in the wake of the collapse of Lehman Brothers.

Home loan payments more than 90 days late fell to the lowest level since December 2010 in the fourth quarter of 2012, Fitch Ratings said today. The Reserve Bank of Australia’s 1.75 percentage point cut in interest rates since November 2011 has reduced the debt burden on borrowers, Fitch said.

‘‘Clearly the market is starting to improve and I would expect it to increase,’’ Mr Oster said at the summit. ‘‘Australia’s default rates are very, very small and they’re not going up.’’

Westpac forecasts a further 25 basis point cut in the RBA’s cash rate in June to 2.75 per cent. NAB forecasts a 25 basis point cut in June and another in the fourth quarter, which would lower the benchmark rate to 2.5 per cent.

Bloomberg