RBA cuts official cash rate by 0.25%
As we predicted yesterday, Australia’s official cash rate fell by 25 basis points this morning to 4.50% which is its lowest since the cash rate system came into use over a decade ago.
Rates for a standard variable home loan will fall to around 6.30%. This means that for an average home loan of $150,000 monthly repayments will fall to $994.15.
With rates dropping 1.75 percentage points since February this year borrowers are now in a unique position to grab their chance to get ahead on home loan repayments should rates later return to high levels.
InfoChoice recommends borrowers maintain repayments at their current levels to maximise savings of up to $150 per month in interest on a $150,000 loan over 25 years.
In the US, the Federal Reserve also dropped rates overnight by 50 basis points to 2.50%. Whilst official rates began their journey at the start of the year at 6.00%, they too are now at their lowest level in 39 years.
Spending is the key to restoring the economy in the US, with much uncertainty being fuelled by the attacks of September 11.
Consumers and business’ alike need to feel confident enough about the direction of the economy to begin spending however consumer confidence is at an all time low.
Announcements of reductions in home loan rates are expected this week. View details of changes here.