Rate cut will improve housing affordability, says real estate association

by Julia Corderoy05 Feb 2015
The official interest rate cut made by the Reserve Bank on Tuesday will improve housing affordability, says a major real estate association.

The Real Estate Institute of Australia (REIA) says the RBA Board has made a considered and accurate assessment of the property market, taking into account economic headwinds Australia and the international community are experiencing.

“The significance of the easing monetary policy is that housing affordability in Australia will improve further,” REIA President, Neville Sanders said.

Sanders says since the RBA began cutting the official interest rate in late 2011, the proportion of the median family income required to meet monthly loan repayments decreased 4.4 percentage points from 34.8% to 30.4%.

Despite some economists arguing that the interest rate cut may have perverse effects on consumer and business confidence – if consumers and businesses worry that low rates signify an injured economy – Sanders believes that improved affordability will outweigh the worry.

“A cut in the cash rate will be very important in boosting consumer and business confidence,” he said.


  • by Rob 5/02/2015 10:33:35 AM

    Interest rates go down.
    Housing sales volume increases.
    Demand creates housing price increases. Housing affordability goes down.
    Now what?

  • by Papery 6/02/2015 10:39:53 AM

    funny...most Lenders have already reached the floor on assessment rates so the rate cut will do nothing for those seeking a home finance now. The only ones to benefit will be existing borrowers who now have some capacity to adjust payment but if there smart, theyll keep paying their mortgages at the same rate& build equity (subject to ppty values at least staying steady).