Housing weakness prompts rate cut calls

by Adam Smith14 Mar 2012

Industry figures are calling on the Reserve Bank to stimulate the economy, claiming new housing data shows a continued lack of confidence.

ABS data for January has indicated a 1.24% drop in home loan approvals. The drop in January - typically a slower month for the housing industry - comes on the heels of nine months of increasing activity. But Master Builders chief economist Peter Jones nevertheless labelled the decline a sign of weak confidence.

"The two recent rate cuts in November and December are not enough, and Master Builders believes the Reserve Bank needs to do more to boost confidence and maintain a sustainable recovery in residential building," Jones said.

Loan Market has also called for Reserve Bank cuts to boost the economy. The broking business said that though banks were now moving independently of the RBA's rate decisions, the cash rate still had "significant influence" over the housing market, and could provide a boost to the sector.

COMMENTS

  • by Vincent 16/05/2012 2:29:31 AM

    Mortgage rates generally rise and fall along with Wall Street seutricies and generally reflect the overall direction of interest rates. By keeping an eye on mortgage market trends and key economic indicators, a borrower has a better chance of obtaining interest rate savings. I would venture to say that mortgage and especially rates and interest rates in general will be higher in the coming years. We are coming out of a period of Fed rates not seen since the 50's. We saw the ten year reach 4.50% range recently which would usually have jumbo mortgages around 6.25% and conventional mortgages in the 5.75% range.