RBA rate cut a help to mortgage holders, but what about the renters?

The Reserve Bank of Australia’s decision to cut interest rates yesterday will be welcome news for the 36% of Australian households with a mortgage, however it won’t do much for the one in three  households who are renting.

The decision to cut rates by 25 basis points to 3.25% wouldn’t necessarily help those striving to buy a home either.

If interest rate cuts lead to house price increases, which many housing analysts suggest they will, many first-home buyers will still find it hard to get into the housing market.

Mortgage repayments are a function of interest rates and how much people have to borrow, so interest rates are only half the picture. We need government to look at the structural problems that drive up house prices, like negative gearing.

Interest rate cuts also don’t solve the housing problem for the 25% of renters in housing stress.

Until we have a national housing plan to actually make housing more affordable, we will continue to see people under stress across the housing spectrum.

The RBA’s decision to reduce interest rates isn’t the solution to housing affordability. It just greases one cog in an engine that needs a full overhaul.

We need a national housing plan that helps take the pressure off households across the board by increasing the supply of low-cost rentals and addressing the tax breaks that push up house prices.

Sarah Toohey is campaign manager of Australians for Affordable Housing.