Cut To Cash Rate Would be Positive to Property Market

While there are headwinds for the housing market, other factors are likely to offset the weakness. Such as a high likelihood that the cash rate will be cut later this year – this may result in lower mortgage rates.

While any cuts to the cast rate may not be passed on in full, the lower cost of debt will provide some positive stimulus for the housing market. 

Standard variable mortgage rates over time_ Source: CoreLogic

Arguably, this stimulus won’t be as effective as previous interest rate cuts due to the high serviceability buffer applied to borrowers, whereby lenders are still required to assess serviceability at a mortgage rate of at least 7% despite mortgage rates are now available around the 4% market or even lower.