Reserve Bank Announces .25% Rate Cut
As expected by most financial analysts, the Reserve Bank announced a rate cut of .25% on June 4.
The rate cut comes in response to a continued sluggishness in the economy and the RBA hopes that this action will help to stimulate the economy into action.
While the CBA and the NAB passed the cut on in full to borrowers, Westpac and the ANZ were not so generous. Westpac cut rates to owner occupiers by just 0.20% And the ANZ only reduced rates by 0.18%. Westpac, however, did reduce interest-only investment loans by 0.35%.
The rate cuts are good news for both new and existing an existing borrowers making it a little easier to qualify for and service borrowings. A mortgage of $500,000 will reduce repayment levels by around $904 pe year. A loan of $750,000 would see repayments reduced by approximately $1,359.
The rate cut is the first such action taken by the RBA for three years and now sets a new record low for official cash rates in this country.
Many analysts believe that there will be a further cut later this year.
The low rate environment coupled with the federal government initiatives for first home buyers and a softening in major city house prices should encourage prospective buyers to enter the housing market. It would be anticipated that these new entrants to the market will help to put a floor under falling house prices and create new confidence in the market.
If you are looking to take advantage of the current interest rate environment it is time to book a consultation with one of our finance experts Australian finance hub.