Cash rate on way to 0.50%
Experts surveyed by comparison site Finder have said they believe that Reserve Bank (RBA) will cut the cash rate on Tuesday.
The RBA Cash Rate Survey found that nearly three-quarters of experts (72per cent) expected the bottom of the cycle at 0.75 per cent or lower, with almost a third (32 per cent) predicting to see the cash rate reach 0.50 per cent.
“The RBA will have its scissors out for the foreseeable future to try to stimulate inflation and reduce unemployment, and lenders should be ready to follow suit,” Finder’s insights manager, Graham Cooke, said.
“The heat is on for those banks who only passed on a partial rate cut (less than 25 basis points) after the June rate reduction. Doing the right thing by their customers this time around – by passing on a cut in its entirety – could see them redeem themselves,”
He stressed that when the RBA cut the cash rate to an all-time low of 1.25 per cent in June, for the most part, lenders responded “thick and fast”.
"Across all of variable rates Finder compares, the average rate has dropped more than 20 basis points in June.
“The winners here are borrowers – they are spoilt for choice with the lowest home loan rates we’ve ever seen,” he said.
However, the larger steps than 25 basis points would be apposite, but smaller ones convey a less panicky picture to onlookers.
Cooke said if the cash rate does get to o.50 per cent, an average mortgage holder could be saving nearly $3,000 a year on their mortgage.
“Of course you don’t have to wait around for these cuts to happen – you can go home loan shopping for a better deal anytime,” Cooke said
“It’s a borrower’s market. A new standard has been set with sub-3% home loan rates so compare options to maximise your savings in the long run.”
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