After months of waiting, we finally have word that the Reserve Bank of Australia has cut the cash rate by 25 points. The move is the first the RBA has made in almost three years, and the new cash rate is sitting at a record low of 1.25 per cent.
But what does this mean for homeowners?
The Treasurer of the Coalition has welcomed the news of the cash rate cut, saying it will benefit Australian households and businesses.
In a press conference, he said, “It is the government’s expectation, indeed, it is the public’s expectation that banks should pass on, in full, to consumers, the benefits of reduced funding costs as a result of the Reserve Bank’s decision.
“In my conversations with the bank CEOs and chairmen, they have made it clear that some of their funding costs have come down,” Frydenberg said.
Just 10 minutes after the announcement, ANZ had already cut its variable interest rate loan by 18 points. But will other banks like Westpac, NAB and National Bank follow suit?
“The impact of a 25 basis point cut on a $400,000 mortgage is the equivalent of saving around $60 a month or $720 a year, which is a timely boost for households,” Frydenberg explained.
In an interview, Cameron Kusher, from CoreLogic, said, “What it will mean is that people who are struggling to repay their mortgage will be able to get in touch with their lender and say, 'can you reduce my mortgage payments'.”
Add to this the fact that home prices have been falling across Melbourne and Sydney and you’ve got yourself a buyer’s market. For those looking to purchase, owning a home has never been more achievable.
Source: The Guardian
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