BREAKING NEWS: RESERVE BANK CUTS RATES!
This is the news we’ve all been waiting for! The Reserve Bank of Australia (RBA) has made history, cutting the official cash rate by 0.25%.
This takes the cash rate to a new record low of 1.25%.
This is real cause for celebration among home owners if lenders pass on the savings. Lower interest rates mean lower home loan repayments for borrowers with a variable loan, letting you pocket some extra cash at a time of low wages growth.
Why the rate cut?
Australia has enjoyed an uninterrupted run of almost 30 years of unbroken economic growth. In fact, that’s a record in the developed world over this period.
But there are signs the economy is slowing, and a big concern for the RBA is that inflation recently fell to 1.3%.
Low inflation may be great news for our budgets, but it can be a sign of a weakening economy. That’s why it bothers the RBA, which is aiming for inflation of 2-3%.
The RBA still believes our economy is on track to continue growing this year, however it isn’t taking any chances. By trimming the cash rate, the RBA is hoping to encourage household and business spending, giving the economy an extra boost to keep it ticking along on a growth path.
What it means for you
In theory, lenders may pass on all – or at least part – of the 0.25% rate cut to their variable rate home loan customers, but there are no guarantees.
What you need to do
Your lender should be in touch shortly to let you know if your home loan rate has moved.
But it’s important to make the most of lower interest rates. Why pay more than you have to?
Now’s the time to get in touch with your Aussie Broker, who can let you know if you still have a competitive rate, or if it’s time to make a change of your own.
If plans to buy a first home, next home or an investment property are on your radar, the Coalition Government announced a series of policies which may help you achieve that goal sooner.