RBA Cuts Rates Again
The Reserve Banks decision to cut interest rates again now places the official cash rate at its lowest level ever.
The decision was made by the Reserve Bank in the hope of stimulating the economy as consumer demand and inflation remain below the bank’s acceptable levels and the job market remains stagnant.
Leaders in the housing market have welcomed the reduced rate and are looking forward to an increased housing buyer demand. Early indications are that investment borrowers are re-entering the market. This would indicate that the slump in property prices may have bottomed out.
Existing mortgage Borrowers should see a reduction in interest rate and payments. Notwithstanding the obvious relief that these cuts offer, the cuts make it a good time for borrowers to review their facilities and shop around to compare their loan interest rate and terms.
The reaction from the banks has not been consistent.
The ANZ this time elected to pass on the full amount of the rate cut after having not done so in June. Neither the NAB nor CBA chose to pass on the full cut this time, while Westpac at least remained consistent by choosing to pass on .2% of the interest rate cut in keeping with its previous decision.
Each bank has selected a different date to pass on the interest rates. The ANZ will be the first of the big four to pass on the recent rate cuts. It has nominated July 12 to do so. The CBA will not pass on the latest cut until July 23.
While the big four’s actions have not necessarily endeared themselves to borrowers, some banks have passed on both recent rate cuts in full. These actions make it an opportune time for you to review all existing loan facilities.
To summarise the situation, interest rate cuts combined with other government initiatives designed to stimulate the housing market should help to inject some life into the economy.
If you are looking to enter the market or to review your existing loan arrangements please contact Australian Finance Hub today.