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First-time buyers benefit from low cash rate

By Ben Faulks

Securing that all-important home loan is crucial when buying property in Page, so the latest cash rate announcement is likely to come as good news.

On 7 July, the Reserve Bank of Australia (RBA) revealed that interest rates would stay at their all-time low of two per cent, as economic conditions remain on a knife edge. The RBA will need to be confident that conditions are just right if any significant changes are going to be made – and it seems that this won't be happening just yet.

Governor of the RBA Glenn Stevens revealed that the national economy is showing signs of growth, but the problem is that it is still below the long term average. This will need to pick up pace if the cash rate is going to be raised any time soon.

However, one positive outcome of the historic low cash rate has been the benefits it has brought to borrowing.

Mr Stevens commented: "Low interest rates are acting to support borrowing and spending. Credit is recording moderate growth overall, with stronger borrowing by businesses and growth in lending to the housing market broadly steady over recent months."

The Housing Industry Association (HIA) wasn't surprised by the cash rate decision, but believes it is just one factor that should be used to benefit the property market. Chief economist Harley Dale suggested that the government should step in with some policy changes – such as reducing taxation – if the economy is going to benefit.

Greater emphasis needs to be placed on giving the housing sector the support it needs, the HIA noted. This will be especially crucial as the downturn in the mining boom starts to take hold, meaning other sectors need to step up to the mark to keep the economy going.

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