The decision by the RBA to leave interest rates unchanged at 2.25 per cent following a decision in February to do the same only leads to more uncertainly for the housing market. The Housing Industry Association’s chief economist Harley Dale says that as the central bank has signalled that a rate cut is planned “it should just get on and do it”. He commented that two rate cuts in quick succession would benefit the construction of new homes and the economy as a whole. However he noted that interest rate cuts were just one part of improving the economy and the housing market: “Given the demonstrated productivity boosts that would result, housing policy reform would be a good place to start.”
Senator warns that stricter lending rules would damage growth
Independent senator Nick Xenophon is planning to propose an inquiry into how measures imposed on banks by the Australian Prudential Regulation Authority would affect the housing market across the whole country when Sydney and Melbourne are the only markets that may need it. Xenophon said that cutting the loan-to-valuation ratio for banks could end up being a “wet blanket that suffocates the rest of the country”. The mechanism has been used in New Zealand but the senator believes that it could be disastrous for markets such as Adelaide, Brisbane and Hobart. He wants any inquiry to include analysis of the effects of foreign investment and how conditions are impacting first-home buyers.
Source: The Australian
Parents help with 20 per cent of first-home purchases
Mums and dads are responsible for an increasing number of first-home buyers making it onto the property ladder. Perth mortgage broker Catherine Clemente says that 1 in 5 first homebuyers get some kind of help from their parents, either a financial gift or as a guarantor on a home loan. Real estate agent Mark Passmore says that the parents helping out are not necessarily wealthy: “I’ve also seen other parents who have some savings or investment properties of their own wanting to help finance their children’s first homes,” he told Perth Now.
Source: Perth Now
Collections: Mortgage News