Home loans market 'boosted by talk of cutting interest rates'


Monday 18 July 2011

Recent speculation that interest rates may be cut in the future could increase confidence levels among prospective home loans customers, experts have stated.

Interest rate cut speculation 'may increase confidence among house buyers'

Pamela Bennett, acting president of the Real Estate Institute of Australia, told the Australian that people are more inclined to move house if they believe rates will hold or drop.

"It works the same way as when there's talk of an increase – that puts people off. If there's a feeling that we're getting close to a cut, it makes confidence start to return," she said.

Her comments come after Westpac economist Bill Evans revised his forecast of an impending increase in interest rates, suggesting instead that the Reserve Bank of Australia (RBA) could cut the base rate by 100 basis points over the coming 12 months.

Interest rates have been held firm by the RBA at 4.75 per cent since November last year when the central bank increased it by 25 basis points to its current level.

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