With the Reserve Bank easing monetary policy, interest rates are on the way down.

Already this year mortgage pre-approvals have begun to rise, suggesting that many aspiring homebuyers are excited by the prospect of cheaper home loans.

With further cuts expected before the end of the year, some economists are predicting Australia could be about to experience another house price boom. Lower interest rates enable people to borrow more and potentially spend more on homes, bidding up prices.

So, how might the RBA’s actions affect home buying behaviour and the housing market more broadly? Research offers us some clues.

Research shows that when a central bank lowers its benchmark interest rate, mortgage interest rates usually follow suit.

We saw this after the Reserve Bank’s May decision to cut rates. Australia’s big four banks........

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