RBA Effects Felt By Home Buyers

The repercussions of the Reserve Bank of Australia (RBA) holding the official interest rates is likely to be felt by home buyers, according to the Real Estate Institute of Australia (REIA).

REIA president Pamela Bennett said the decision announced on Tuesday (August 7) is disappointing for home buyers.

Ms Bennett said: "The June quarter Cost Price Index (CPI) figures showed inflation was well within the RBA's target zone with the analytical trimmed mean increasing by just two per cent for the year to June 2012." 

If the interest rates had dropped 0.25 percentage points then it would have led to a decrease in the average home loan repayment of $48 a month, she added.

While acknowledging that the RBA was being cautious she said the statistics for home loans and building are low despite the two interest rate cuts in May this year.

The housing data emphasises why the RBA needed to reduce interest rates because the market has not showed any improvement since the two previous cuts, Ms Bennett said.

In June the number of first home buyers jumped to 18.3 per cent compared with 17.8 per cent in the previous month.