Mortgage Rates and an Uncertain Economy

Helping to offset the headwinds are mortgage rates which are still tracking around the lowest level since the 1960’s. Further cuts to the cash rate are looking like a growing possibility.

However, its uncertain how much stimulus lower rates may provide to the housing sector considering the tight servicing criteria and higher funding costs from lenders which would prevent any cuts being passed on in full.

With dwelling values expected to fall further, the attention now turns to what impacts this could have on future household consumption which accounts for around 60% of the economy. If households reduce their spending as the wealth effect moves into reverse, then rate cuts or other policy intervention could become more likely.

There is so much happening in the housing market right now and conditions have rarely been this uncertain or diverse.