MBA says further interest rate cuts needed

Master Builders Australia (MBA) has asserted that the Reserve Bank of Australia (RBA) needs to introduce further rate cuts in order to stimulate the housing sector in the country.

Peter Jones, chief economist at MBA, observed that the rate cut at the start of November – when the RBA reduced the cash rate from 4.75 per cent to 4.5 per cent – will help, but said more needs to be done.

"A sustained recovery in housing is critical because Australia-wide the residential market is underbuilding and undersupplied," he commented.

He asserted that recent figures showing a rise in housing finance in September only "mask" weak loans for new residences.

The expert said the "key finance indicator" released recently by the Australian Bureau of Statistics (ABS) are those showing that the demand for new dwellings remain flat.

Earlier this week, ABS figures revealed that the number of home loans approved by lenders in September rose by 2.2 per cent compared with the preceding month.

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