In the three months since the Reserve Bank started cutting the official cash rate in September, repayments on a $250,000 mortgage have fallen about $500 a month - more than enough for many borrowers to have avoided repossession.
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From the category archives:
Interest Rates
High interest rates took toll on families
Year of the U-turn
The 2008 year will go down as the year of the RBA’s big U-turn on monetary policy, when rates fell from a 12-year high to the lowest level in 35 years. Westpac Banking Corporation chief economist Bill Evans says the RBA overtightened monetary policy, but added “that’s always how monetary policy works”. [click to continue...]
Interest rate cut creates 43,000 losers
Official interest rates would have to fall to the lowest levels since February 1965 for these borrowers to recoup the cost of switching out of a fixed loan through cheaper mortgage repayments. Borrowers who took out a fixed rate loan in August would face higher exit fees than those who took out a mortgage in March, when the RBA was still talking up inflation as its biggest worry.
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NAB boss Ahmed Fahour hits out at focus on card rates
As ANZ and Commonwealth Bank yesterday lowered their plastic-card rates, NAB’s CEO Australia Ahmed Fahour said the economic benefit from NAB’s 100-basis point cut in mortgage and business lending rates, announced on Tuesday, would be far greater.
Making sense of the cut
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.
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Cash rate reduced by a further 100 basis points, to 4.25 per cent
At its meeting today, the Board decided to reduce the cash rate by a further 100 basis points, to 4.25 per cent, effective 3 December 2008.
Recent actions by governments and central banks to stabilise their respective financial systems have begun to take effect. Nonetheless, financial market sentiment remains fragile, as evidence accumulates of weak economic conditions in the major countries and a significant slowing in many emerging countries. Commodity prices have fallen further. This, combined with the likelihood of below-trend growth in the global economy, suggests that global inflation will moderate significantly in 2009.
Why you should pay $380 less on your home loan
The Reserve Bank cannot set interest rates solely for NSW. But if it could, rates would be about 2 percentage points lower than they already are, economists say. The Herald has calculated if the banks lowered interest rates by 2 percentage points - NSW borrowers with a $300,000 mortgage would be about $380 a month better off.
Reserve set to cut rates again
RBA to cut rates in December - Household wealth down by 8% - Full point rate cut possible The minutes of the board’s last meeting, on Melbourne Cup day, show it rejected a recommendation by officials to cut by half a percentage point and instead cut by three-quarters amid alarm about “confidence among consumers and businesses”.
Reserve Bank likely to cut rates by up to 1 per cent
A further major cut in interest rates to 4.25 per cent - the lowest point in seven years - would lower households’ monthly repayments by up to $200 on a standard variable loan of $300,000.
You call that a cut?
The Commonwealth Bank, Australia’s biggest mortgage lender, was the first of the big banks to announce a lowering of its standard variable mortgage rate, by 0.58 of a percentage point to 7.74 per cent. NAB and Westpac followed the Commonwealth Bank’s lead and have not passed on the full 0.75 percentage point cut.
Members Equity Bank has announced it will pass on the full 0.75 percentage point cut to its borrowers. While the big banks’ standard rates are about 7.7 per cent, most borrowers receive a discount of about 0.5 of a percentage point .
