The Reserve Bank’s 50 basis point cut to interest rates yesterday was long overdue and should spur prospective property buyers into action, various industry professionals have claimed.
“Times have been tough in the housing market for some time and buyers have been waiting for this downward movement in rates,” said Real Estate Institute of SA (REISA) chief executive officer, Greg Troughton.
“Now the trigger has been pulled, we can expect some more activity in the marketplace over the coming months.”
Real Estate Institute of Australia (REIA) President, Pamela Bennett, said the RBA’s decision to cut the cash rate to 3.75 per cent was the right one but will do little for the economy if commercial lenders fail to pass it on in full.
“It is now on the big lenders in particular to restore faith with the Australian public, pass on the rate cut in full, and give our economy the shot in the arm it so desperately needs,” Ms Bennett said.
If the 50 basis points cut announced today is passed on by the banks, it will save $91 per month off the average mortgage and will make home loans around 4.3 per cent more affordable for Australian families.
Ms Bennett says while this cut is long overdue, it is most certainly a welcome step in the right direction to stimulate the lower end of the market and to make buying a home more affordable for young Australians.
“First home buyers are starting to return to the property market but the level of activity is still only about half of what it was in 2009 and affordability has plateaued,” Ms Bennett said.
“We desperately needed this cut and we’re pleased the RBA has finally decided to respond appropriately. Of course, it will count for little if we don’t now see corresponding action from the major lenders,“ Ms Bennett concluded.
Angus Raine, CEO of Raine & Horne, agreed. “If a lender doesn’t pass on the full rate cut, homeowners should consider shopping around for the most suitable mortgage,” he said.
Real Estate Institute of Queensland (REIQ) CEO Anton Kardash said the low inflation result had given the Reserve plenty of room to move.
‘‘Today’s rate cut is great news for everyone working in the Queensland real estate sector with the market just starting to show signs of improvement following a particularly difficult 2011,’’ he said.
The REIQ added that the interest rate reduction was also timely given data released yesterday showed that the number of new detached house sales in Queensland dropped by 15.3 per cent in March - a concerning statistic to come to light on the same day that the Queensland Building Boost expired.
‘‘It is imperative that lenders pass on this rate cut in its entirety to help restore economic activity and confidence levels. Indeed, lenders’ continual excuses about higher funding costs are not only starting to sound very stale but also increasingly self-interested,’’ Mr Kardash said.