DEMAND for homes in Lithgow is set to increase, but the city is in a good position to cope with this week's interest rate cuts, mortgage broker Jason Puxty says.
Australia's interest rates have dipped below one per cent for the first time, but the Reserve Bank of Australia (RBA) is already preparing to cut them further if the economy remains stagnant.
The new record low of 0.75 per cent is the third cut this year, as the central bank tries to push the unemployment rate down and inflation and wage growth up.
The Commonwealth Bank was the first of the big four banks to trim its interest rates in response to the RBA's move.
However, while the CBA cut its standard variable rate for home loan customers by between 0.13 and 0.25 per cent it did not match the RBA's cut completely.
Westpac, and its subsidiaries St George Bank, Bank of Melbourne and BankSA, cut headline variable home loan rates by 0.15 per cent, for both owner-occupiers and investors.
While ANZ cut variable rates by 0.14 per cent and NAB by 0.15 per cent.
Mortgage Choice Central West's Mr Puxty said the falling interest rates will see the lending capacity, for first home buyers in particular, increase.
"It is a better time to get in the market, as long as the buyer has sufficient contribution to satisfy the lender," he said.
Mr Puxty said demand for homes would go up and this would put upward pressure on the Lithgow region.
"Lithgow is a remarkable area and the demand we have is pushing prices up and I think it can only go from success to success," he said.
Small and large businesses will also be affected by the interest rates cuts.
"Some borrowers will want to keep payments as is and reduce the loan term, others will reduce along with reduction interest rates and this will mean extra surplus cash," he said.
"This will help businesses in the long run and grow their employment levels."
Lithgow residents who may be thinking of going for a mortgage will be affected, Mr Puxty said.
"Commencing today, a number may want to refinance and that reflects the particular lenders commitment to the market," he said.
"By having the Commonwealth bank reduce by 0.13 percent, that really upsets the consumer."
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