Top 5: Finance & property quotes week commencing February 2

By the resi financial blog team, 05 February 2015

Top 5: Finance & property quotes week commencing February 2

Much of the discussion this week surrounded the RBA's landmark decision to trim the cash rate by 25 basis points at their Tuesday board meeting. The changes have been largely welcomed by housing industry commentators around the country, with even more speculation about when further rate cuts will occur.

#1. RBA Governor Glenn Stevens pointed to slowing economic growth as a reason behind the bank's decision. He noted that while households will have felt some relief from plummeting oil and energy prices, this has been offset by a slowdown in trade which is reducing income growth and causing the unemployment rate to rise marginally over the past year. 

"Overall, the Bank's assessment is that output growth will probably remain a little below trend for somewhat longer, and the rate of unemployment peak a little higher, than earlier expected. The economy is likely to be operating with a degree of spare capacity for some time yet," he said. 

#2. The Housing Industry Association applauded the bank's decision to cut the cash rate, saying that the lower rates will stimulate the Australian economy. In particular HIA Chief Economist, Harley Dale, noted that the new residential construction industry needs further rate cuts to add even more momentum to employment and overall economic activity. 

"A further 'touch down' to interest rates will help maintain very healthy levels of new home building while hopefully broadening the base of Australia's economic growth," he said. 

#3. Master Builders Australia has similarly welcomed the new cash rate with open arms. In a February 3 statement Peter Jones, Chief Economist of Master Builders Australia, said that freshly lowered cash rate will do wonders for fragile business and consumer confidence. In particular, he emphasised that the commercial building sector will feel the most benefit from the decision. 

"The RBA's decision will benefit the housing market even as residential builders enjoy a solid uplift in activity driven by pent-up demand," he said.

"Commercial builders will particularly welcome the RBA's move to lower rates as non-residential building continues to suffer from the effects of weak business investment." 

#4. The Real Estate Institute of Australia applauded the reserve bank's actions, but pointed out that if the housing market is to feel the benefit, lenders will need to translate the low cash rate to reduced mortgage rates.

"The significance of the easing monetary policy is that housing affordability in Australia will improve further, however we need today's cut to be passed on fully by lenders," said REIA President, Neville Sanders.

#5. The Australian Bureau of Statistics (ABS) revealed that there might be more first home buyers than recent statistics indicate. An investigation uncovered that many lenders have been leaving instances in which buyers who can't get first home buyer loans out of their datasets. 

"Initially we thought the fall off in first home buyer loans over the last two years was due to reduced affordability arising from changes in grants, rising house prices, increased investment housing loan activity and general economic conditions," said Jacky Hodges from the ABS.

"However, subsequent analysis and follow-up with lenders has confirmed that the drop was partly due to under-reporting by some lenders."

Categories: Home Loans, Property Investment