Rate rise will hurt many homeowners

The Reserve Bank of Australia’s decision today to increase the cash rate by 25 basis points to 7.25 per cent will hurt many homeowners and lock out an increasingly number of first home buyers from the market.

“This interest rate rise takes the cash rate to its highest level since July 1996 and delivers yet another blow to many homeowners and aspiring first home buyers,” Real Estate Institute of Queensland (REIQ) managing director Dan Molloy said.

“Clearly the Reserve Bank is single-minded in its determination to knock inflation on the head, but a third increase in five months is going to hurt a huge number of homeowners and further deepen the affordability crisis. “In its zeal to rein in inflation, the Reserve is inflicting pain on a large number of homeowners as they try to factor this rise in to already tight household budgets.” Mr Molloy said as there is evidence of an easing of demand in the housing market - possibly driven by the three interest rate rises since November last year – another increase is premature.

“It is disappointing that the Reserve did not wait until the full impact of last month’s interest rate increase had been felt,” he said.

Nicola McDougall Media Manager The Real Estate Institute of Queensland 21 Turbo Drive, Coorparoo Qld 4151 PO Box 1555, Coorparoo DC Qld 4151 Ph: 07-3249 7302, Fax: 07-32496202 media@reiq.com.au