May 05, 2015
Borrowers have been given reason to celebrate, with the Reserve Bank of Australia cutting the official cash rate to the new historical low of just 2 per cent.
At its Board meeting earlier today, the Reserve Bank announced it would cut 25 basis points off the cash rate, marking the second rate cut of the year.
Mortgage Choice chief executive officer John Flavell said the sluggish pace of Australia's economic rebalancing ultimately encouraged the Reserve Bank to take action and trim the cash rate.
“Recent economic data suggests the first rate cut has failed to have the desired impact, with consumer sentiment falling sharply in April,” he said.
“The Westpac Melbourne Institute of Consumer Sentiment Index declined by 3.2 per cent over the month of April to just 96.2, meaning pessimists outweigh the number of optimists.
“With the Federal Budget set to be released later this month, the Reserve Bank may have trimmed the cash rate to give consumer sentiment a boost ahead of the Budget announcement.”
Last year, consumer sentiment plummeted 6.8% in the aftermath of the Budget and remained weak for the rest of the calendar year.
“Furthermore, the rising Australian dollar would no doubt have given the Reserve Bank room for concern at today's Board meeting,” Mr Flavell said.
Regardless of the reasons behind the rate cut, Mr Flavell said the decision to trim the official cash rate should spell good news for homeowners.
“If February's rate cut is anything to go by, borrowers can expect their lender to pass the RBA's latest rate cut on, taking home loan rates to new lows,” he said.
“This opens up a great opportunity for home owners and potential home buyers alike. If you have been in the same mortgage for the last few years, you may find there is another product that is not only cheaper, but more suitable to your needs. Alternatively, if you are looking to get onto the property ladder in the not-too-distant future, now may be a great time to do just that.”
If you want to learn more about your home loan options, call 13 77 62.