The Reserve Bank of Australian (RBA) announced they will be dropping official interest rates by 0.25%, which is great news for those of us with home loans. The RBA listed low commodity prices and low inflation as the main drivers behind their decision. They also feel that housing price growth has slowed (especially in capital cities along the Eastern seaboard with the new supply of apartments hitting the market), and they are not concerned that by lowering interest rates they will put excessive upward pressure on property prices.

Whilst in the past there has been a lot of focus on the banks passing on the full rate drop, the commentary we’ve been reading in the last couple of months indicates we could see a number of banks not passing on the full cut.

As a general guide, for someone with a $400,000 loan, if their lender passes on the full 0.25% cut, they will save over $50 per month.

As always, if you have any questions relating to your current loan, or would like me to look at some more options for you, feel free to give me a call.