|With the uncertainty of the federal election behind it, the RBA has decided to reduce the official cash rate to 1.25% as it tries to stimulate household spending and the economy. This is the first rate move since August 2016 and I’d like to share some thoughts on why the Reserve Bank of Australia has made this decision.|
In making this decision the RBA has taken into account inflation being below its target range of 2-3%, continued pressure on house prices, evidence of rising levels of mortgage stress, a borrowing squeeze in response to the Banking Royal Commission, slow wages growth and continued concerns around the level of under employment.Here is a table showing how Australia’s average mortgage sizes may be affected:
|Likely decrease in repayments|
Loan amount examples;
$150,000 $31.25 per month
$250,000 $52.08 per month
$350,000 $72.91 per month
$450,000 $93.75 per month
$550,000 $114.58 per month
$650,000 $135.41 per month
Lenders continue to review rates independently of the RBA with some already making reductions in anticipation of the RBA decision. It is therefore important to review your lending options regularly to ensure they remain the most suitable for your situation.
Breaking News: NAB and Commonwealth Bank have decided to pas on the full 0.25% while ANZ said they are only going to pass on a part of the rate cut. We will keep you up to date with what other lenders are doing in aseparate post.
If you have any questions about these announcements or interest rates, please feel free to contact us.
For more information regarding residential home loans, investment and commercial loans please visit Smart Search Finance.