The Reserve Bank of Australia’s decision to cut interest rates by 0.25% to 4.25% is welcome news for the 36% of Australian households with a mortgage, however it won’t do much for the 29% of households who are renting, or the 32% who own their home outright.
AAH Campaign Manager Sarah Toohey said that the interest rate decision wouldn’t help those striving to buy a home either.
“Mortgage repayments are a function of interest rates and how much people have to borrow, so interest rates are only half the picture. The fact is that people have to borrow more just to get into the housing market. Governments need to look at the structural problems that drive up house prices.” said Campaign Manager Sarah Toohey.
“According to data from the Reserve Bank of Australia, households are paying more of their income on housing interest payments now than they were back when interest rates were at 17%. That’s because households have had to borrow more to get into the housing market”.
As Interest rates stay the same, the real story of housing affordability is tax
Today’s interest rate decision is a sigh of relief for people with a mortgage, but doesn’t help those striving to buy a home.
Interest rates are only part of the picture when it comes to making housing more affordable.