Lower interest rates may spur property market

At its monthly meeting last week, the Reserve Bank of Australia elected to reduce the official cash rate by fifty basis points to 3.75 per cent.  This decision was welcomed by CENTURY 21 and we expect that it will help to encourage growth in the national property market. 

Charles Tarbey, Chairman of CENTURY 21 Australasia, said of the decision, “Should the banks pass on the rate cut, this decision should be an excellent shot in the arm for a relatively quiet property market and the economy at large.”

“I believe the decision is the right one when considering the state of the Australian economy and could potentially be the first of a number of cuts.”

The Reserve Bank’s decision came after the release of lower than expected inflation figures, ongoing economic turbulence in Europe and disappointing research from the Housing Industry Association showing that new home sales fell to their lowest levels in over a decade in March 2012. 

In his statement following the meeting, RBA Governor Glenn Stevens commented that the decision was “based on information received over the past few months that suggests that economic conditions have been somewhat weaker than expected, while inflation has moderated.”

Mr Stevens noted that national output growth was somewhat below trend over the past year and had been affected in part by temporary factors, but also by the persistently high exchange rate.  He also referenced that interest rates for borrowers have been close to their medium-term averages over recent months, “albeit tending to increase as lenders passed on the higher costs of funding their books.”

“With a relatively gloomy global economic outlook in the short term, now more than ever the RBA needs to encourage investment and consumer confidence to spur economic activity,” concluded Charles Tarbey.  

The RBA will no doubt be watching closely to see the response of the major banks to its move.  Since the decision was made, NAB, Commonwealth Bank and Westpac have announced that they will each lower their standard variable interest rates by 32 basis points, 40 basis points and 37 basis points respectively, with a decision from ANZ due to be announced this Friday.  

For more information about the residential property market in your areas of interest, please feel free to stop by your local CENTURY 21 Real Estate office for expert, clear advice.  Additionally, if you would like to speak to a mortgage professional about the impact of this rate cut on your mortgage, or to find out more about suitable loan packages for your circumstances, please contact CENTURY 21 Home Loans.  

Posted by Charles Tarbey on 08/05/2012 at 12:58 PM | Categories:


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