12:00a.m. 9th October 2008

The decision by major banks to slash loan rates has received a mixed response on the Sunshine Coast.

While it is generally thought the 0.8 of a percentage point reduction in the big four banks’ standard variable mortgage rate will have a positive effect, the Maroochydore Chamber of Commerce has warned more cuts are needed to restore confidence.

The move by the ANZ, NAB, CBA and Westpac followed the Reserve Bank of Australia’s unexpected decision on Tuesday to cut the official cash rate by 100 basis points.

Chamber of commerce president Myles McNamara said it was too early to tell if the cuts would help to shield Australia from the financial turmoil in global markets, but he had a feeling it would not be enough.

“There’s been so much negativity for a long period of time that I think it will take more than a 1% interest rate cut to have a significant impact,” he said.

“We need broader stability – both in Australia and abroad – before there is a high level of confidence.”

The property and tourism sectors are, however, more upbeat. Six properties sold at auction in Caloundra yesterday, further fuelling optimism in the sector.

Ray White Mooloolaba and Ray White Commercial Sunshine Coast principal Greg Young said the rate cut was exactly what the property market needed.

“It will put real estate back into the spotlight as a good, sure vehicle for investors,” he said. “Hopefully it will encourage people to not only buy houses but build houses, which is needed because the rental market on the Sunshine Coast is very tight at the moment.”

Smartline mortgage consultant Bruce McAnally agreed the cuts should boost confidence in the market.

He said homebuyers were very cautious at present, with many hedging their bet with combination loans.

“We’re seeing more of that than what is normal,” he said.

Mr McAnally said lower rates would likely result in higher home prices – and that would price many people out of the market.

“If rates continue to go down it will stimulate the property market and prices will potentially go up,” he said.

Tourism Sunshine Coast acting chief executive Ren van Tulder said the rate cuts, combined with the introduction of Tiger Airways’ daily Melbourne flight in December, could only help.

“It will certainly instil some visitor confidence,” he said.