The Reserve Bank of Australia (RBA) has made another cut to the cash rate. At its meeting today, the Board lowered the interest rate by 25 basis points. This comes just after the RBA made a similar cut only last month.
Now sitting at 1 per cent, the lowest level on record, the Board has high hopes the cut will be passed on by major lending institutes. If it is, it could give homeowners some relief on their mortgage repayments.
In his statement today, RBA Governor Philip Lowe said the decision will ‘support employment growth and provide greater confidence that inflation will be consistent with the medium-term target’.
“The outlook for the global economy remains reasonable,” Mr Lowe said. “However, the uncertainty generated by the trade and technology disputes is affecting investment and means that the risks to the global economy are tilted to the downside.”
While only two of the major four banks passed on the cuts in June, Treasurer Josh Frydenberg is putting more pressure on them to follow through. Industry experts such as Cameron Kusher from CoreLogic have their doubts but even if the banks pass on half or three-quarters of the cut, there will be significant benefits to homeowners.
Graham Cooke, insights manager of Finder, has urged those holding mortgages to contact their lenders and see if they can do anything. “If you threaten to refinance, you’d be surprised how often you get a rate cut by simply calling up,” he said.
Some economists are predicting another one (or even two) more rate cuts by the end of this year, bringing the cash rate as low as 0.5 per cent.
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