Newspaper article Sunshine Coast Daily (Maroochydore, Australia)

Aggressive Cut to Protect Economy

Newspaper article Sunshine Coast Daily (Maroochydore, Australia)

Aggressive Cut to Protect Economy

Article excerpt

THE Reserve Bank of Australia's decision today to cut the cash rate by 100 basis points to 3.25 per cent is further evidence of the aggressive measures being adopted to protect the nation's economy, according to The Real Estate Institute of Queensland (REIQ).

REIQ managing director Dan Molloy said the one percentage point cut was necessary given global economic conditions continue to deteriorate.

"This adjustment comes on top of the Federal Government's $42-billion stimulus package which aims to insulate the Australia economy in the months ahead," he said.

"It is now vitally important that lenders pass on the full benefit of this interest rate cut not only to homeowners, but to small businesses so more jobs can be retained.

"The Reserve slashed rates in the last quarter of 2008 as the reality of the world economic crisis set in. And as these conditions have continued to decline, further rate cuts are likely in coming months."

Mr Molloy said as the consumer price index fell 0.3 per cent in the December quarter, the Reserve Bank's singular focus was now recession-proofing the economy.

"While job security remains the number one concern for many Queenslanders, the historically low interest rate means homeowners with an average $300,000 mortgage are more than $600 a month better off than they were just a few months ago," he said.

"First home buyers are also returning to the market in numbers not seen since the First Home Owners Grant was introduced in 2000."

LJ Hooker Peregian Beach principal Lyn Wildman endorsed Mr Molloy's comments and added that both the interest rate cut and a number of measures in the Federal Government's stimulus package announced on Tuesday would be welcome news for local property markets.

"We have already experienced a lift in buyer activity at this end of the Coast in January", said Ms Wildman, "and Tuesday's welcome news should keep that momentum going.

"Since mortgage rates reached nearly 10% almost a year ago, our market has been subdued," she said.

"But now they are likely to hit their lowest levels since the '60s, it must stimulate activity in asset related borrowing.

"As we are seeing now, I would expect the major boost to affect the low and middle sections of our market here, the upper end is likely to remain subdued due to the loss of share values."

Damien Said of Century 21 On Duporth, Maroochydore, welcomed the latest cut, especially for home buyers entering the market.

"This cut, the first for 2009, means those people with mortgages will be around $1000 a month better off when you take the cumulative cuts into consideration, plus it makes entering the market a much less daunting option for buyers who have been waiting for the right time."

Mr Said believes buyers are beginning the move back into the market, with the effects of the first home buyer initiatives announced late last year continuing to be felt. …

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