China's interest rate cut to flow through to Australian Property-Real Estate market

With China cutting its interest rates for the first time in four years the Australian Economy, the Property-Real Estate sector and the resources sector are all set to reap some benefit.  

The People’s Bank of China has cut its one-year lending rate by a quarter 1/4% of a percentage point to 6.31% in a move that is expected to stimulate economic growth.  With the US dropping its average mortgage rate to the lowest in 30-years since 1971, and the Australian cash rate is also just off record lows as well.  

The Chinese central bank has also relaxed borrowing rules for banks, allowing them to offer a 20% discount on the lending benchmark, up from the previous 10% discounted rate and the deposit rate was also cut from 3.5% to 3.25%.  

Westpac's weekly Phat Dragon reports says rate cut will allow banks to offer more attractive rates to prospective borrowers, "while being forced to take a view on the competitive landscape for deposits".  

That has margin implications because if the authorities want to jolt the financial sector back onto a commercialisation trajectory (and Premier Wen’s strident rhetorical attack on the banking ‘monopoly’ points decisively in that direction) making them think for themselves...is a very good start," says Phat Dragon.  

China relies on Australia for around 5% of its exports, mainly in the form of its mineral resources.