Interest rate rise 'is more bad news for first home buyers'

Wednesday 03 March 2010

Article by Mozo

The Reserve Bank’s decision to raise the official cash rate this week will make it even more difficult for first home buyers to enter the property market, it has been claimed.

Housing Industry Association senior economist Ben Phillips said that the removal of the first home buyers boost and the interest rate increases in the final quarter of last year had already caused a significant fall in affordability, news.com.au reported.

"HIA recognises the need to return interest rates to normal levels over the course of economic recovery but cautions against haste," he added.

Mr Phillips said that strong growth in residential construction during the next two years is needed to prevent Australia’s housing shortage from reaching acute levels and "delivering undue upwards pressure on rents and existing home values".

Yesterday the Reserve Bank raised the official cash rate by 25 basis points, up to four per cent. Mr Phillips’ comments may interest Aussies who decide to compare home loans.

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