Three of the four major banks have lowered rates after the Reserve Bank cut interest rates to a record low.
The Reserve Bank has cut interest rates to a record low of 1.75%, in a move that will benefit the property sector.
Governor Glenn Stevens said the board believed improved lending practices in the housing sector and more moderate property price growth opened the door to lower interest rates.
"The board took careful note of developments in the housing market," he said. "Indications are that the effects of supervisory measures are strengthening lending standards and price pressures have tended to abate."
The move comes a week after the consumer price index unexpectedly showed prices contracted 0.2% during the March quarter, the first quarterly decline in seven years.
Three of the four major banks have taken the RBA's lead, immediately lowering mortgage rates. Only ANZ failed to pass on the rate cut.
Housing Industry of Australia senior economist, Shane Garrett, applauded the RBA's' decision. "Housing affordability remains very challenging, and homeowners deserve to receive their fair share of today's rate cut," he said.
Garrett said lower rates will be good for the property sector. "Both new home building and renovations activity can be expected to benefit," he said.
Real Estate Institute of Victoria President, Geoff White, said the rate cut would help first-home buyers get into the market.
“First-home buyers, in particular, will benefit from today’s decision,” he said. “Buyers currently have access to the lowest interest rates in the nation’s history, providing much needed assistance to first-home buyers.”
Scott McElroy, director of hockingstuart, agreed that lower interest rates will help first-home buyers achieve the great Australian dream.
"We're working closely with a lot of our tenants, and trying to help them buy their first home," he said.
"With interest rates as they are at the moment, if they're paying rent, the costs of buying something are not ridiculously above what they're paying in rent in a lot of cases."
The Australian dollar dropped more than a cent in response to the surprise cut. A lower dollar could boost demand from offshore buyers of Australian property.