RBA Cuts Interest Rates
RBA Cuts Interest Rates
The Reserve Bank of Australia today made a move to cut interest rates to a historic low of 2.25%, paving the way for the most affordable home loans in 40 years. This is the first time in 16 months that the rate has been cut.
After the RBA’s announcement the Aussie dollar took an initial leg lower and has been extending losses against the US dollar, falling more than 1.5 per cent to below $US0.77. The RBA said, “The Australian dollar has declined noticeably against a rising US dollar over recent months, though less so against a basket of currencies. It remains above most estimates of its fundamental value, particularly given the significant declines in key commodity prices. A lower exchange rate is likely to be needed to achieve balanced growth in the economy.”
CoreLogic RP Data’s head of research Tim Lawless said the decision could take the typical standard variable mortgage rate down to 5.7 per cent and the discounted variable rate to 4.85 per cent, the lowest cost of mortgage debt since July 1968. The lower mortgage rates will fuel the market and prompt buyers to enter the market with confidence.
Greater Building Society has already slashed its three-year fixed rate home loan to 4.44 per cent — half a per cent lower than the equivalent rate on offer by the big four banks. The lender also cut its five-year fixed rate to 4.64 per cent, 35 basis points cheaper than the majors.
