Reserve Bank Cuts Interest Rate To Historic Low 1.75%

Australia’s official interest rate has been cut to 1.75 per cent by the Reserve Bank – a new historic low.

It should bring down the average standard variable home loan rate down to 4.52 per cent, saving home owners an average of $72 per month on a $500,000 mortgage.

However, last time the rate was cut, in May 2015, around 60 per cent of lenders failed to pass on the cut in full. It’s a good idea to shop around to make sure you’re getting the best deal on your mortgage.

The cut has been made in response to pressures on the economy from a low-rate of inflation.

Low interest rates are bad news for people trying to save money. There are also concerns it could put more pressure on the housing market, making it more difficult for first homeowners to purchase a house.

However in a statement the Reserve Bank Governor Glenn Stevens said homebuyers shouldn’t be adversely affected:

“In reaching today’s decision, the Board took careful note of developments in the housing market, where indications are that the effects of supervisory measures are strengthening lending standards and that price pressures have tended to abate. At present, the potential risks of lower interest rates in this area are less than they were a year ago,” he said.