Interest rates held at record low for 11th month
At its first meeting of the new financial year, the Reserve Bank of Australia (RBA) kept the cash rate at 2.50 per cent for the eleventh consecutive month, the longest and lowest period of rate stability in decades.
Loan Market director Mark De Martino said the low cash rate was helping lift consumer confidence while keeping inflation within the RBA’s targeted range
“The low interest rates of the past year have been great for consumers either looking to get into the property market or pay lower interest rates on their existing mortgages. One of the biggest pluses has been that these low rates have kept inflation low, which is encouraging the the long-term outlook for low interest rates,” he said.
Mr De Martino said low interest rates were one of the primary drivers behind Loan Market’s home loan settlements increasing by 25 per cent over the past six months compared to last year and that first home buyers were particularly active in purchasing.
“We’ve seen enquiries from First Home Buyers as high as almost 50 per cent of all our home loan enquiries this year. As the pool of prospective first time buyers continues to grow, we could eventually see them become the primary drivers of the property market,” he said.
Mr De Martino said one of the main issues first time buyers faced was with their deposit sizes and that further concessions stamp duty or more purchasing grants would help them get into the market.
“Most prospective first time buyers watch the loan establishment costs eat into their savings and push them into Lenders Mortgage Insurance territory. These buyers have excellent loan applications but ultimately have to hold off until their deposit can cover the bank’s requirements and stamp duty.”
“If the government wants to see more new entrants into the property market, they’re going to have to look at more ways to incentivise them and reward the savings they already have.”