RBA rate cuts to ‘help economy’ could instead just boot the housing market. People who have borrowed high will breathe a sigh of relief at an announcement that should see them sitting pretty for at least three years.
This week the Reserve Bank of Australia has again slashed interest rates and taken other steps to try to alleviate COVID-19 economic pressures. The RBA cut the cash rate to 0.1 per cent on Tuesday and less than 24 hours later, the Commonwealth Bank of Australia and Westpac both announced changes to fixed mortgage and business loan rates.
This is the 10th time the RBA cut official interest rates to record lows. This time they took rates down to 0.1 per cent. It has been over 10 years since they last put official interest rates up, as the next graph shows.
“The RBA governor wants this rate cut to help reduce ‘problem loans’ but this will only work if the banks pass it on,” said RateCity research director Sally Tindall.
The RBA’s rate cut will remain in place for at least the next three years, giving certainty to banks and other lenders about their funding costs.
Lending conditions are the strongest they have ever been, a good time to start thinking about your home renovation or new build design. Don’t hesitate to give one of our team a call to kick off your next project.