The recent cut brought the interest rate to a record low 1%, boosting housing affordability for home buyers
Home buyers will benefit from the Reserve Bank of Australia’s (RBA) decision to lower interest rates, the Real Estate Institute of Australia (REIA) said.
“Subject to the banks passing on the cuts in full, this means that for each $100,000 borrowed annual, payments decrease by $500. For a first home buyer, who in the March quarter had an average loan size of $338,000, this means a saving of $140 per month,” said REIA president Adrian Kelly.
The proportion of income required to meet loan repayments suffered a 30.3% fall during the March quarter, according to REIA’s Housing Affordability Report. However, the rate cuts made in consecutive months would see this proportion decrease to 28.6%, the lowest since 2003.
“Unlike the last series of cuts in 2015 and 2016, which stimulated the housing market through increased investor activity, this cut will stabilise the market,” said Kelly.
First-home buyers would benefit the most from the recent cut, as the number of first home buyers declined to 8,010 in April with the average number of home buyers for the first four months of 2019 being 8,319, down by 1,100 per month in comparison to the last four months of 2018.