Reserve Bank: Reduction to official cash rate could be good news for home loans

Anyone interested in taking out a home loan, regardless of whether it's a first home buyer loan or for property investment, may be happy to hear that the Reserve Bank of Australia (RBA) cut the official cash rate earlier this week (August 6), which could be fantastic news for those looking to enter the real estate market.

The cash rate was reduced to a low 2.75 per cent back in May, before being slashed by another 0.25 basis points at the beginning of the week – lowering the cash rate to a historically low 2.5 per cent.

According to an August 6 statement released by Glenn Stevens, governor of the RBA, borrowing nationwide has decreased, but there have been signs of an increased demand for housing finance.

Peter Bushby, president of the Real Estate Institute of Australia, said that housing affordability could increase by 4.7 per cent, while the while the average loan repayment amount required from median family incomes has decreased from 29.9 per cent down to 28.5 per cent.

"This is the best level of housing affordability since the December quarter 2009 and will be welcomed by investors who have been returning to the market in greater numbers over past months," said Mr Bushby in an August 6 statement.

"The average loan repayment would be $463 per week and that is $149 per month less compared to the figure recorded a year ago."

This could signal a fantastic opportunity for anyone looking to secure a great deal on a home loan. Now could be the perfect time to get in contact with a broker at Mortgage Choice and begin the search for a suitable loan for your situation.