Reserve Bank Adjusts Cash Rate Downwards > > > > >

After much speculation, ‘will they or won’t they’, today the RBA adjusted the Australian cash rate by 25 basis points to just 2.5 per cent effective 7 August 2013.

So what does this mean?

There is much divided opinion if lowering the cash rate at this time would help the Australian economy or not. Then again, most home owners are more concerned about their home loan rates and not so much the economy……this is where it all starts to get a bit tricky and confusing, depending on your priorities and which side of the fence you sit on.

At time of writing, NAB, CBA and Westpac have all announced passing on the full rate cut to home loan borrowers with Westpac going just a little bit more, probably in an attempt to start winning back some market share, this is great news as on a $300,000 mortgage it saves you around $62 in interest each month, ANZ should make an announcement on interest rates within a week or so.

The possible downside to this rate cut is house prices will now more than likely continue their upwards trend making it even more difficult for new home buyers to get into the property market. Having said that, when we look back at historical rates, it would appear interest rates have not been at this level since the 1950′s, so the reality is, nobody can predict if this rate cut is good news or not on a national scale!

Our Australian dollar has depreciated in overall value by about 15 per cent since April this year, based on exchange rates, this is supposed to help our economy, but we Australians continue to spend overseas sending Australian money offshore and not keeping it local; cars, electrical goods, clothing etc. even to the point where our Australian supermarkets no longer support local growers for fresh produce 100%, opting to import ‘fresh produce’ from overseas markets simply because it pleases the share holders bottom line more favourably! Just look at what’s happening in Northern Victoria, hundreds of families finding themselves not knowing what to do next as the local produce markets and canneries have closed their doors to the locals opting for the cheaper imported product!

Bottom line, with home loan rates at this level, if you are in the market to buy real estate, it is probably not a bad thing, call me on 0438 041 111 to discuss what we can do to help you with your next home loan.

As always, enjoy life, work hard, play safe and remember that we are always here to help you

‘Take the Confusion Out of Lending’

Peter Vinci - 0438 041 111