Craig Balme from Century 21 said he had already seen an increase in activity following the “good news”.

“The rate cut has increased confidence among purchasers,” Mr Balme said.

He said the cut would affect all areas of the market from first home buyers through to higher end buyers and investors.

“There has been an increase in buyer inquiries and buyer commitment to purchases.”

Mandurah First National principal/licensee Ted Pankhurst agreed the cut would increase buyer confidence and bring activity back into the real estate market.

He said his office had experienced good results following the rate cut with an increase in sales activity and results.

“On a global scale this is a very proactive step forward by the Federal Government,” he said.

While Mr Pankhurst said buyers were now in a strong position, he said there was a long way to go before the real estate market was in the clear.

“We are in a very interesting situation,” he said.

He said the rate decrease would be good for all aspects of the real estate market and that investor confidence was a good indication of how the market was going.

Builders hopeful of a turnaround

by Karena Cox

BUILDERS are expecting the cut in interest rates to give the housing industry a boost after it dropped off in July and August this year.

The Australian Bureau of Statistics reported Australian home loan approvals in August fell to a seven-year low and dropped by more than a quarter in 2008, which has had a dramatic effect on the new homes industry.

Housing finance commitments have dropped by 27.1 percent since its peak at 67,126 in January 2008.

Total housing finance by value fell 3.0 percent in August, seasonally adjusted, to $17.513 billion.

Great Living Homes sales and marketing manager Barry Brownrigg said the number of news homes they were building had plummeted since February this year.

Gemmill Homes sales and marketing manager Shane Casserly reported their company started to drop off in July and continued into August and September.

Both Mr Brownrigg and Mr Casserly agreed the rate cut would benefit the building industry.

“I most definitely think it is a good move from the Reserve Bank,” Mr Brownrigg said.

“Sales will no doubt increase because when people start to get their confidence then the strings to the purse start to open,” he said.

“We’ve got people who are sitting fence and numerous clients waiting until they see how the market moves so overall it will be a welcome relief and benefit.”

Mr Casserly predicted the industry would start to pick up again in November and continue well into next year.

Brokers welcome the move

by Karena Cox

LOCAL mortgage brokers have welcomed the Reserve Bank of Australia’s decision to cut rates by one full percent.

Susan Mason from Mortgage Choice in Mandurah and Coastline Mortgages’ Jerry Gibb agreed it was a surprise, but a good surprise and one that would help ease the pressure off borrowers.

Aussie Home Loans was the first to respond with a rate cut of 75 basis points to six percent.

Then Westpac went a step further and slashed its rates by 80 basis points to 8.56 percent.

Australia’s big lenders reduced their variable mortgage rates by 80 basis points, with all banks set to pass on the cut from next Monday except for Bendigo and National Australia Bank.

They will cut their variable rate from the following Monday.

Mrs Mason said she was pleased to see a major and non leading bank take the first step.

“It put the pressure on the other banks… now banks have no excuse in passing on the breaks otherwise consumers would be on their backs.”

Mrs Mason said the reduction was only a good thing because it would reduce repayments and help people wanting to access new loans.

Mr Gibbs agreed and hoped the rate cut would stimulate the property market again.

“But I would advise borrowers be cautious in their borrowing requests and needs and would suggest it may be prudent for borrowers to use the savings in building up a surplus in their mortgage payments for any future hard times that may come,” Mr Gibb said.

While most banks and lenders reacted and reduced their rates following the RBA’s announcement on Tuesday, Mr Gibb and Mrs Mason recommended borrowers see a broker to guarantee they were getting the best available deal.

“Some people think ‘I can’t do any better, banks are all the same’, but that is not the case and brokers can even help you find a better deal within your current bank,” Mrs Mason said.

Mr Gibb agreed.

“I would suggest that borrowers consult a mortgage professional when looking to make a purchase or refinancing for a better loan facility as banks only advise on their own products and not what a competitor could and would offer which could see you as a borrower save thousands in interest over a life of a loan, this especially applies if you are a business operator as banks interest and ongoing charges are quite expensive with cheaper options being out there,” he said.

“I would hope the Government keeps them accountable when the funding position changes in the world as the banks have already raised the rates independently some 0.55 percent above the Reserve’s increases in the past so we as customers are paying rates that are inflated by a margin of around 0.75 percent per annum now (as they did not pass on the full one percent decrease) above official Reserve rates.”

“So let’s see how the Government will make these organisations toe the line when things change back to normal.”

Cut to provide breathing space

FOR Australians struggling to pay off home loans there is some mortgage relief after the Reserve Bank of Australia announced a full one percent cut on Tuesday afternoon.

The decision and the follow up from the banks mean the typical home buyer with a $300,000 mortgage would save about $171 a month.

For most borrowers that will come into effect on Monday, but St George and National Bank of Australia will have to wait an extra week.

Though a useful bonus, the savings will still be more than $40 a month less than if the banks had fully passed on the one percentage point cut in the Reserve Bank’s official cash rate.

The money 24-year-old conference and event services coordinator

Kristy O’Reilly will save on the Meadow Springs home she is building with her partner Stephen Matthews will be spent on paving, landscaping and painting.

“It means we will have extra money to spend on finishing off the house,” she said.

Dawesville couple Keri and Lance Arkell welcomed the news, saying it would give them a little more breathing space.

“We’ll probably just use that money to finish off those little things we put off around the house,” Mrs Arkell said.