Last week’s rate cut by the Reserve Bank of Australia is giving a renewed boost to the property market – already one of the world’s hottest.
The central bank cut the key interest rate to a record low 2.25%. Mortgage rates headed lower as a result, with the two largest lenders – Commonwealth Bank of Australia and Westpac – cutting theirs to a six-year low and National Australia Bank dropping rates to a near 40-year low.
Geoff Schippers, a Sydney-based mortgage broker, said at least 70% of his clients are looking at investing in one or more residential properties. “People who were sitting on the sidelines are now motivated to get into the market, he said.”
Commonwealth Securities economist Savanth Sebastian said the mortgage rate cuts would provide a “real impetus” for the market, but cautioned that “there is certainly a lot of risk in an asset bubble forming in property.”
