How low can the interest rates go?
The Reserve Bank of Australia cut interest rates at the August meeting, dropping the cash rate to the lowest level seen in 53 years so get ready to embrace the extra savings or plan that holiday, as most of the Big 4 banks have already passed on the benefits!
After three consecutive months holding the interest rate at 2.75%, the news that the Reserve Bank of Australia (RBA) decided to cut the cash rate down to 2.5% at the August board meeting didn’t come as a surprise.
Australia continues to face political uncertainty, declining mining interests and activity, rising unemployment levels and lower property investments but it’s hoped that the lower interest rates will help stimulate the residential housing market, boost consumer confidence and increase retail spending.
Many lenders have immediately moved to lower their Standard Variable Rates (SVR), including three of the Big 4 lenders. Westpac even moved by more than the 0.25% RBA cut, although their SVR is still slightly higher than their competitors.
The only major bank we’re waiting to hear from is ANZ and as per their policy, we’ll receive their decision on the Friday after the announcement. If they move by the full 0.25%, which is what’s expected, then the average SVR of the Big 4 lenders will now be below 6% - sitting at 5.88%... so maybe it’s time to start planning that family holiday or get excited about how much you’ll save each month off your mortgage!
In terms of further interest rate cuts, the experts say there’s none on the cards for now as the RBA wait to see the full effects of the current rate cut on the market and economy.
If you’re feeling stuck with a fixed rate mortgage, give the team at Choice Home Loans a call, as you might be able to refinance and secure a better interest rate.
If you’re considering a first house purchase or upgrading, Choice Home Loans can also help you determine your financial options - simply contact them at firstname.lastname@example.org or call 1300 2 CHOICE