Cash rate decision encouraging for first home buyers

By the resi financial blog team, 06 September 2013

RBA Annnouncement September 2013

Earlier this week (September 3), the Reserve Bank of Australia (RBA) announced their decision to retain the official cash rate at its current, historically low level of 2.5 per cent.

In a statement released by Glenn Stevens, governor of the RBA, he said that the low cash rate level was there to aid interest-sensitive spending and the growth of assets across the nation - including home loan borrowing.

While the decision to keep the rate steady was expected, there has been a number of reactions within the real estate and property industry to the news.

Peter Bushby, president of the Real Estate Institute of Australia, said that the decision to hold the rate steady this close to a federal election was the right move to make.

"Housing affordability is a real issue for Australians and first home buyers need an incoming Government to address this through a comprehensive housing policy," said Mr Bushby in a September 3 statement.

Mr Bushby went on to say that the reducing of the cash rate had helped many first home buyers secure their homes with competitive fixed or variable rate home loans.

"As a result of the easing monetary policy, housing affordability in Australia has been improving slightly for the past two years and the proportion of income required to meet home loan repayments is at its lowest since the June quarter of 2003," said Mr Bushby.

"Keeping interest rates low is essential not only for encouraging first home buyers into the market but it’s vital to further stimulate building activity and provide new jobs in the housing industry."

Chief economist for the Housing Industry Association, Harley Dale, echoed these sentiments.

"The Bank should be prepared to ease rates further in coming months given the modest nature of the recovery underway in residential construction," said Mr Dale in a September 3 statement.

"A final round of interest rate cuts in late 2013 would coincide with a likely boost to household and business confidence following the federal election."

Categories: Home Loans