It's raining rate relief!

A sudden and unexpected easing in home loan rates this week is to the property market, what a bit of rain is to drought-stricken farmers.

The past few days have seen rates in the shorter end of the interest rate curve fall quite significantly – up to 45 basis points in some cases – taking two-year rates down to the 9.40% mark.

While these are not cheap by historical standards, they are significantly better than what homeowners and buyers could have secured a couple of weeks ago.

One of the interesting things about the changes is that that for some time the five-year rates have been the cheapest in the market – and therefore appealing to many borrowers. These rates have remained static over the past week and now we are seeing shorter-term rates on par with longer-term ones, or in some cases lower.

While the falls are good news, they are just the first drops of rain in a struggling market.

There are still two major issues facing buyers. One is that banks are tightening their lending criteria – or more accurately, they have done the tightening and don't appear to have much intention of loosening things up. Secondly non-bank lenders are struggling, with more falling by the wayside in recent times.

I guess the big issue people are pondering is whether or not these interest rate falls will help stoke up the flame which has been burning under the housing market.

My guess is a muted yes.

For people who can meet the lending criteria or have cash on hand then they are likely to start getting more active.

Also astute buyers will know that it is not easy to pick the bottom of the market. To wait until prices are rising again maybe too late – well, too late to get the best bargain anyway.

As one real estate agent said: "It is very hard to judge the bottom of the market but most people will miss out on the real bargains as they will wait until the prices are going up and confidence returns before buying."