MORTGAGE lending rates may be at historically low levels, but one Wagga real estate agent believes the Reserve Bank needs to lower the cash rate even further.
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This week, three of Australia's big four banks - Westpac, Commonwealth Bank and National Australia Bank - have slashed their fixed five-year interest rates to 4.99 per cent.
Bobby Gardner, from PRDnationwide Wagga, says lowering rates further will help first home buyers, who may be priced out of the market at present, buy into the great Australian dream.
"At the end of the day, having the lower interest rates is going to assist people to get into more affordable housing," he said.
"Instead of renting, people can start taking hold of what most people dream of doing - owning their own home."
Mr Gardner said the move by the banks to drop their fixed five-year loans below 5 per cent was a positive move for the market.
But financial planner and Wagga City Councillor Julian McLaren says the theory that lower rates automatically lead to a jump in affordability doesn't always work out in practice.
Lower lending rates often lead to an increased cost of assets, Cr McLaren said, which can erode the savings generated by lower interest costs.
Cr McLaren also warned that despite rates being fixed in at rock-bottom levels over five years that it wouldn't necessarily mean cheaper repayments over the lifetime of the loan.
"People have to be cautious borrowing too much at low interest rates, even though they're fixed for five years," he said.
"They've got to think about the longer-term obligations of servicing their debts ... always assume in the longer term interest rates will go up so don't overcommit yourself."
