Could the April rate hold benefit first home buyers?

SoldHouseSome commentators are claiming that the Reserve Bank of Australia’s (RBA) announcement to hold the cash rate for April at 2.25 percent could help ease prices for houses and units over the next month.

A market slowdown would allow greater purchasing power for first home buyers in our current market.

According to ABS data, the number of first home buyers taking out home loans has declined as a result of the recent housing boom, which saw more investors enter the market.

The proportion of housing finance by first home buyers have decreased from 18.8% in 2012 to 14.9% in 2015.  Whilst the average home loan increased by 1.07% between December 2014 and January 2015, to $346,600 (across Australia).

In the official statement from RBA Governor Glenn Stevens, special mention was made of the current lending market:

“Credit is recording moderate growth overall, with stronger growth in lending to investors in housing assets. Dwelling prices continue to rise strongly in Sydney, though trends have been more varied in a number of other cities over recent months.”

Overall, despite the potential benefits to first home buyers, the April rate hold decision does come within a tricky economic climate for the RBA, where economic indicators have remained virtually unchanged for the previous period.