Rate cuts needed to make houses affordable, survey shows

The majority of Australians believe that further home loan interest rate reductions are required in order to encourage people to take on a mortgage.

According to a new survey conducted by Loan Market, the recent national cash rate cuts have done little to boost the uptake of home loans, the Australian Associated Press reports.

The Reserve Bank of Australia slashed interest rates by 75 points in May and June, but most people still think the standard rate of 3.5 per cent is too high.

A lot of the respondents also said there needs to be more incentive for new construction projects, which will help to add more new homes to the market.

This is a view shared by the Housing Industry Association and bosses at the organisation recently stated that current levels of building activity are poor.

Loan Market corporate spokesman Paul Smith suggested that Australia's banks and lenders have not helped matters either.

"The cuts haven't been passed on in full by most lenders and they haven't been a circuit breaker for sectors such as housing and retail," he was quoted as saying.

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