RBA cuts have 'disproportionate influence' on buyers

by Adam Smith23 Mar 2012

Moves by the RBA provide a boost to homebuyer confidence, even when banks don't follow suit.

A Genworth study has found that the official cash rate impacts buyer sentiment, regardless of how banks react to RBA moves. The mortgage insurer's Streets Ahead homebuyer confidence survey found 39% of potential homebuyers believe now is a good time to purchase, up 2% from September 2011. RFi research director Alan Shields said the survey showed the impact of the Reserve Bank's successive cuts late last year.

"The cash rate has a disproportionate influence on homebuyer sentiment," Shields said.

Genworth president and CEO Ellie Comerford agreed, and pointed out that mortgage stress caused by interest rates had fallen from 50% in September 2011 to 32% in March.

"Despite lenders not passing on the full 50bps of cuts, we can see the lowering of the cash rate by the RBA since September 2011 has made a significant impact on borrower sentiment," she said.

Shields also pinned heightened stress in September's survey on media speculation over the Reserve Bank's future moves, claiming by September homeowners were "busting for a cut". He said this sentiment was fuelled by media reports suggesting RBA cuts were imminent.

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COMMENTS

  • by Loz 23/03/2012 10:58:59 AM

    Thats because consumers still havent woken up to the fact that Banks no longer care about what the RBA does...it will take years...like so many customers believe they have to hold a credit card to earn a credit rating...a myth from the olden days...next people will think theres no collusion between petrol companies....