The Commonwealth and the National Australia Banks have slashed their standard variable mortgage rates from 7.74 per cent to 6.74 per cent, passing on in full the official interest rate cut of 1.00 percentage points and cutting close to $200 of the monthly cost of servicing a mortgage.
Commonwealth Bank economist Micheal Blythe says the combination of lower mortgage rates, lower petrol prices, budget tax cuts and the December stimulus package will boost household disposable incomes by as much as 7 per cent. Over the year to October sales are down 0.6 per cent.
In the past 4 months the Reserve Bank has undone 6 years of rate rises, pushing its cash rate down to from 7.25 per cent to 4.25 per cent in the boldest series of cuts since Australia was emerging from recession in the early 1990s.
Late yesterday the futures market was pricing in another cut of 0.75 percentage points at the Bank’s next meeting in February and then further cuts to take the cash rate down to 2.75 per cent by May, its lowest level since the 1960s.
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