Historic rate cut to new lows by RBA welcomed: L Janusz Hooker

The historic decision to cut rates to new lows today by the Reserve Bank of Australia is good news for mortgage holders and should put some money into their back pocket and improve housing affordability.

I am confident the banks will pass on the majority of the savings, which should give the market a push along in the traditionally quieter winter selling period.

With the cash rate at 2.75% the RBA is in unchartered territory now.

Consumer confidence is notching up, transaction numbers are increasing and buyer enquiry is up but the issue agents are having at the moment is there is not enough listings to meet the demand.

People do hold off listing their home with an election approaching but typically that doesn’t happen until a month or so before polling day - but I am sure it is influencing some people at the moment and is in the back of their minds.

The RBA was left with little choice to drop rates following a continued weaker manufacturing sector and concerning housing construction figures, which is at it’s lowest for the past eight months.

It follows similar moves last week by the European Union which cut their cash rate to a new historic low of just 0.5%.

In general the broader international economic environment is still patchy.

Australia’s unemployment rates had also increased last month and is also likely to have contributed to the RBA’s move.

Everyone was banking on the housing construction picking up the slack as we pass thought the resources investment peak this year but there is a real risk that this is not going to happen so they are now pulling the biggest lever they have left which is cutting rates.

L Janusz Hooker is the LJ Hooker deputy chairman.