How the interest rate cuts affect home owners
THE Reserve Bank of Australia cut rates again today, by 100 basis points.
The official cash rate is now 4.25% and is the fourth rate cut in as many months. The reason that the central has cut rates so aggressively once again is because they are trying to reduce the chances of Australia going into a recession by slashing rates and hoping consumers start spending again.
The 100 basis point cut means that official rates have fallen by almost 40 per cent. If passed on in full by the banks, this latest cut will save home owners with a $250,000 mortgage more than $200 a month in their repayments.
Will the banks pass on the full rate cut?
During the last round of cuts, banks and other lenders were reluctant to pass on the full savings, so home owners wait to see if this time be any different with the banks saying they still face high funding costs. The general feeling amongst forecasters and finance advisors is that many of the banks will pass on most of the cut but not all.
Savings for You?
With lower interest rate and falling petrol prices, many home owners will now be breathing a sigh of relief in the lead up to Christmas. However, you need to check if your lender has lowered home loan rates and if you are seeing any savings. Find your nearest Mortgage Broker to see what your lender is doing and find out where you stand.
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