As predicted, the RBA decided to cut interest rates earlier this month to their lowest levels in 50 years. The cash rate dropped 0.25% (from 2.75%) to a low of 2.5%.
Governor Glenn Stevens said that low levels in mining investment, high unemployment rates and a recent decline in building approvals have all contributed to the RBA’s decision to lower interest rates this month.
All four major banks decided to pass on the cut in full to their customers:
- National Australia Bank cut its standard variable home loan rate by a quarter of a percentage point to 5.88 per cent from August 12.
- Westpac went beyond the RBA’s 0.25 per cent reduction, cutting its standard variable rate by 0.28 per cent, to 5.98% effective from August 19.
- CBA cut both its Standard Variable Home Loan and its Residentially-Secured Better Business Loan by 0.25 per cent to 5.9%. The new rates will be effective from August 14.
- ANZ lowered its variable rates by 25 points to 5.88 per cent – the equal lowest of the Big Four alongside NAB.
The current Australian standard variable mortgage rate now sits at 5.9%. Apart from a brief period in late 2008/2009, the current SVR is the lowest it’s been since 1970.
Home buyers and mortgage holders will welcome the lower rates passed on by the banks.
At Infinity Property agents we are already seeing a positive increase in buyer activity as a result of the low interest rates over the past 3 months. Solid to strong house price growth is also being recorded in most capital city markets as buyer activity and confidence continues to rise.