RBA decision 'certainly not a win for homeowners'
Article by Mozo
The Reserve Bank of Australia's (RBA) decision not to sanction further interest rate cuts this month "is certainly not a win for homeowners", it has been claimed.
Representatives of the Real Estate Institute of Australia (REIA) had been hoping for another drop in the national cash rate when the central bank's board members met on November 6th.
However, they decided the problems facing the global economy had eased slightly in October and the existing rate of 3.25 per cent was sufficient.
The RBA had trimmed interest rates by 25 points last month, but many property market experts feel that more still needs to be done.
REIA president Pamela Bennett highlighted how much money another 0.25 per cent cut would have saved mortgage customers.
"A drop of just 0.25 per cent of the cash rate would have, on average, saved homeowners $102 per month in loan repayments compared to the June quarter," she remarked.
"The average monthly loan repayments would be reduced to $2,053, or $474 a week which is $206 less than the same time last year."
At a time when many households are struggling to make ends meet, these sort of savings would have come as a huge boost.
That said, Ms Bennett added that while interest rates are an important factor in people's decision to buy or rent a house, the RBA cannot be expected to do all the work.
Indeed, she stated that inefficient state taxes, excessive red tape and land release delays all need to be sorted out if the Australian property market is to flourish again.
Despite a multitude of interest rate cuts since the end of 2011, the REIA recently revealed that Aussie house hunters have been slow to take advantage of the reductions.
Having analysed figures provided by the Australian Bureau of Statistics, Ms Bennett concluded the 0.4 per cent rise in home loan uptake reported in August was "modest" and there had been very little response to rate reductions in May and June.
Have a question about home loans? Ask the money gurus at Mozo Answers.