The Reserve Bank of Australia (RBA) reduced the official cash rate to a 50-year low of 0.75 per cent in its October meeting – the third time in five months it’s happened.
Driven by higher unemployment and sluggish job growth, RBA Governor Phillip Lowe said sustainable economic growth needed an extended period of low interest rates.
The decision was no surprise to many commentators – pundits had anticipated the move after US and European finance bodies similarly slashed interest rates. An Australian cut, they said, was necessary to ease downward pressure on the Aussie dollar and buffer it in the face of global risks.
All in all, the cash rate has dropped by 75 basis points since May this year, supporting the RBA’s stance on boosting job growth and restricting inflation.
Some commentators now believe the downward trend will continue in light of the recent Fed cuts – to the tune of another 25 basis points – taking the rate to 0.5 per cent in coming months.
The housing market is making a recovery.
According to CoreLogic’s recent Hedonic Home Value Index, values rose by 0.9 per cent last month after increasing by 0.8 per cent in August.
Buoyed by earlier RBA rate cuts in June and July, this tentative growth is strongest in Sydney and Melbourne and offset by comparatively weak household spending and wages growth.
Nevertheless, rates don't look likely to rise any time soon, and savvy mortgage and property investment customers will be reconsidering their options to make the most of the potential gains in the new low rate setting.
No surprise the banks aren’t jumping to pass on savings.
In the fallout after the RBA's decision, many were unsurprised the big banks were reluctant to translate the RBA record cuts into lower mortgage rates.
CBA decided to hold only half of the RBA’s percentage point rate cut (0.125 per cent), while NAB announced a 0.15 per cent cut.
After extensive deliberation, Westpac also declared a 0.15 per cent cut to its mortgage rates effective from 16 October. ANZ (still reeling from the backlash following its stingy June cut) was last to the party with a decrease in all its variable interest home loan rates by 14 to 25 basis points from 11 October.
These rates were accompanied by a deposit returns squeeze by up to 0.2 per cent, driven by independent lenders push for a greater piece of the mortgage market pie in the new competitive environment.
Titan bucks the trend.
We’re committed delivering the market’s most competitive interest rates so you can go to your customers with confidence.
Our greater flexibility and more relaxed policy to lending criteria mean we can offer more bespoke loan solutions. We can also help those who get the brush-off from the big four due to circumstances beyond their control.
In the wake of the RBA decision, we’ve cut our residential home lending product (NSW, VIC, SA and QLD only) to 5.85 per cent for home loans ($200K to $10 million) over house securities, with a maximum LVR of 65 per cent.
You'll also get access to our legendary customer service, rapid approval process, easier settlements, lightning-fast drawdowns and no commission clawback.
Because that’s just the way we do business.