Interest Rate Predictions
Home loan interest rates had risen to an average of 9.65% in September, and many home owners were struggling with high repayments. With each official interest rate cut, banks and lenders were generally quick to pass on the savings, but only a hand full passed on the full amount to customers. Many lenders are now offering standard variable home loan rates of around 7.74 per cent.
It is always a bit of a game trying to predict what the official rates cuts will be the general view now seems to be a cut of 100 basis points. While early forecasts were closer to 0.75 per cent, recently some economists had forecast a 1.25 per cent cut.
The Reserve Bank of Australia (RBA) is due to meet tomorrow for the final time this year, and during the monthly meeting is expected to agree on a one per cent cut, hoping to prevent Australia from going into a recession.
While official interest rates are now at 5.25 per cent having fallen from 7.25 per cent since September, consumers are not likely to pick up spending unless there are further rate cuts.
After the December 2 meeting, the RBA next meets in February.
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