MBA says rates hike will adversely affect demand for home loans

Thursday 04 August 2011

Article by Mozo

Master Builders Australia (MBA) has welcomed the decision by the Reserve Bank of Australia (RBA) to keep interest rates at 4.75 per cent, but warned it against future increases.

Increasing interest rates 'could harm housing market'

It claimed that the confidence of consumers in the country will take a further hit if the central bank raises rates.

Wilhelm Harnisch, chief executive officer of MBA, said the "extended pause" in the bank's monetary policy was vital to "shore up consumer sentiment and encourage a much-needed upswing".

"A further rate rise at this point in the building industry cycle would have been a major negative for consumer confidence," he asserted.

However, he noted that the decision on August 2nd not to increase the cash rate will provide the housing market with "breathing space".

His comments echo those of John Symond, chairman of Aussie Home Loans, who told Business Daily that a reduction in interest rates would boost consumer sentiment.

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