Interest rates to plummet to near zero
The average standard variable mortgage interest rate will be 6.3 per cent within five months according to market expectations. That would translate to repayments on an average $300,000 home loan being cut by $470 per month. The futures markets expect the Reserve Bank to cut rates in both November and December, with reductions totalling 1.25 per cent, bringing the cash rate down to 5.5 per cent. Analysts expect the cash rate to be down to 3.75 per cent by March 2009. University of Western Sydney associate professor of economics and finance Steve Keen predicted an official cash rate of zero per cent by 2010. Economists say there is increasing optimism that the co-ordinated global bail out of the financial system will work but there is increasing pessimism regarding the outlook for the global economy.
Source: The Australian