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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 <a target="_blank" href="https://www.google.com.au/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=1&amp;cad=rja&amp;ved=0CDEQFjAA&amp;url=http%3A%2F%2Fwww.ljhooker.com.au%2F&amp;ei=V42IUevVJOeoiAeW8YHwDQ&amp;usg=AFQjCNGDqJErtIcyQbh_HM4m8zuxi0BpdQ&amp;bvm=bv.45960087,d.aGc">LJ Hooker</a> deputy chairman.
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Historic rate cut to new lows by RBA welcomed: L Janusz Hooker

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Rate cuts take time to filter through the economy, but our research shows the property market responds quickly.
This rate cut will lead to cheaper loans and add momentum to the housing market in the coming months.
It could also fuel construction, leading to property-related jobs and an uptick in tax revenue for the government.
In the marketplace we have seen house prices rising on average since the last RBA rate cut in June, so vendors have been buoyed heading into spring selling season and will continue to be.
The LJ Hooker network of mortgage brokers see the rate cuts in their lead sheets.
Each time the Reserve Bank of Australia lowers the cash rate there is a noticeable increase in inquiries from those looking to purchase property.
Borrowing rates to buy a home were historically low even before this rate cut.
Market rates for three-year fixed-rate mortgages are 113 basis points below the average since 2000.
This will encourage more Australians to buy property, whether a primary home or an investment, in the coming year.
Interested buyers are still adjusting to the last RBA rate cut in June.
This new cut will further encourage them to enter the market.
L. Janusz Hooker is deputy chairman of <a href="https://www.ljhooker.com.au/" target="_blank">LJ Hooker</a> deputy chairman
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L Janusz Hooker

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