Two speed economy sees interest rates drop
Interest rates have been on hold for all of 2012 but as the two speed economy continues to divide the nation, the RBA cuts interest rates by 50 points – will you feel the difference?
Many industry experts thought that the Reserve Bank of Australia (RBA) should cut the cash rate at May’s board meeting by 0.5% for there to be any chance of a decent rate reduction by the banks.
However, not many thought the RBA actually would slash interest rates by the full 0.5%, with most predicting a 0.25% cut by the RBA.
The announcement of a 0.5% cut takes the official cash rate to 3.75% and so begins the wait and see game as to whether or not the banks and lenders will pass on the cut to their Standard Variable Rates (SVR).
The interest rate cut comes as Australian retailers face lower consumer spending and Victoria faces rising unemployment, all the while Queensland and Western Australia benefit from a mining boom, which is essentially giving Australia what’s phrased as a two speed economy. One positive – one negative.
If we’re honest, no one is expecting that the banks will pass on the full 0.5%, but there is speculation that at least half of the rate cut will be passed on, if not more. Did we hear you say yippee?!
For mortgage holders, the announcement offers a great relief in the anticipation of a reduction in mortgage repayments for the foreseeable future, or by keeping your repayments the same - allowing you to build a buffer for the future.
The RBA should be commended for making this move, and now we eagerly wait to see what the banks will pass on!
We’re also proud to commend Choice Home Loans, who are the Porter Davis lenders of choice, on their recent award from the Mortgage Professional Australia Magazine who named Choice Home Loans as the Number 3 Mortgage Broker in the country! Congratulations to the whole team and we’re pleased to offer our clients such award winning service.
Not sure what to do about your interest rates, whether you’re looking at a new loan or want to refinance, speak to an award winning, qualified professional at Choice Home Loans. firstname.lastname@example.org or call 1300 2 CHOICE
How do you feel about the latest interest rate cut?