Builder pleas for interest rate cut

Dale Alcock.

WA's biggest home builder has pleaded for the Reserve Bank to cut official interest rates, arguing it would deliver a much-needed boost to the economy.

As new research shows households increasingly happy about the state of their personal finances, Dale Alcock warned the bank against delaying a rate cut because of the long-term economic troubles it could cause.

The Reserve Bank board meets tomorrow with markets and analysts united in expecting it to deliver a quarter percentage point rate cut.

It would take official rates to their lowest level since early 1959. Such a reduction would reduce repayments on a $300,000 mortgage by about $44 a month.

But there are concerns the Reserve may hold its ground because it would effectively coincide with the Federal election campaign.

Mr Alcock, managing director of construction and property firm ABN Group, said a rate cut would be particularly valuable in WA as the fall in mining investment work was affecting jobs in the residential construction sector.

"We have historically weak levels of home building at the same time as an ever increasing population, which is having a major impact on Australia's growth and prosperity," he said.

"Because our population is significantly increasing, there's the potential for lots of work in house building over the next few years, so why not unlock that potential now by giving the economy the kickstart it needs."

The rate cut may be what is needed to get consumers spending again.

The ME Bank household financial comfort report, out today, found a rise in the level of financial security across the nation.

Comfort levels, driven by an increase in the proportion of people saving, are now at their highest levels.

Consulting economist Jeff Oughton said households were increasingly keen to pay back debt with a rise in the proportion making extra mortgage repayments.

"As the Reserve Bank has continued to cut rates to stimulate the economy, Australians have continued to build a savings buffer and they remain financially cautious," he said.

The highest household comfort levels continue to be found in WA and the ACT.

The lowest are in Tasmania where unemployment hit 8 per cent last month.

Even among those households that are spending more than earning, the gap has fallen sharply since the start of the year, falling to a $395-a-month difference from $701.

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