0.25% interest rate cut by RBA – more good news for the Townsville Real Estate Market

As I predicted in various articles this year, and in Keeping with the thoughts of Bill Evans of Westpac two years ago, the RBA has once again cut rates.
There is now a strong likelihood that mortgage holders could see rates lower than during the GFC , despite the Banks clawing back the margin they lost during the CBA’s war against Aussie home loans (which they now own 40% off).

The office announcement (and it won’t be the last – were not at the bottom yet) – as reported by Domain.com.au is as follows :

Reserve Bank has cut interest rates today by 0.25 per cent.

The official interest rate is now 3.25 per cent. Rates were last this low in October 2009.

The 25 basis point fall is the fifth rate cut the Reserve Bank has made since

November last year.

Rates have now fallen 1.5 per cent since the current cycle of easing began.

The cut comes after recent revelations that the domestic economy is slowing and amidst renewed fears for the health of the global economy.

The Reserve Bank faced a mixed bag of data when it met today including cooled commodity prices and state and federal budget cuts on the horizon.

“Many economists had been predicting one or two rate cuts by the end of the
year,” says Domain property expert Carolyn Boyd.

“Everyone was expecting a move on Melbourne Cup day, citing the fact that the Reserve Bank has moved up or down on the last six Melbourne Cup days. The central bank opted instead to step in today to stimulate the economy.”

When the Reserve Bank next meets it will have the benefit of the September quarter inflation data, which is due out on October 24.

Each 0.25 per cent drop in interest rates slices about $60 off the monthly interest cost of an average Australian mortgage.

Whilst the Bank’s have been pushing fixed rates options in the headlines, I have said before the rates offered in the 2 – 5 year range are still higher than what I would see them at when they bottom – so there should be some very low 5% fixed rates on offer shortly.

This can only be good news for the Townsville Property Market.

Graham Lynham


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