As the end of the financial year draws closer, the Reserve Bank of Australia has announced the outcome of its board meeting and it has decreased the cash rate by 25 basis points.
The official cash rate is now 1.75%.
In taking this decision it appears the Reserve Bank has reacted to concerns around the relative strength of the Australian Dollar and the impact this is having on exporters and tourism.
It was widely expected that the RBA would have waited until the Federal Budget was delivered tonight before making any call. Clearly the RBA is concerned with the state of the economy and has acted earlier rather than later!
The market is speculating that the four big banks will not pass the decrease, citing increased funding and regulatory costs.
Therefore a fresh round of competition is likely to be sparked amongst lenders so it is a great time for us to review current finance arrangements.
How does this impact the average mortgage holder? Here is a table showing how Australia's average mortgage sizes may be affected:
Loan amount examples:
$150,000:Likely decrease in repayments per $31.25 per month $250,000: Likely decrease in repayments per $52.08 per month $350,000: Likely decrease in repayments per $72.91 per month $450,000: Likely decrease in repayments per $93.75 per month
Please get in touch if you would like to discuss the current finance market in light of today's announcement and how it may impact you.