In a move sure to impress those in the market for a home loan, the Reserve Bank of Australia (RBA) has reduced the official cash rate to a record low of 2.0% earlier this week. This came as a surprise to many economists who had speculated the rate would hold steady to allow more time for the economy to settle following the last rate cut in February 2015.
It’s speculated this may not be the last cut for 2015. The RBA meets monthly and of the 34 economists surveyed about the cuts, 6 respondents have forecast further reductions to the official rate.
Reduced mortgage repayments leave more room for consumer spending, which in turn increases business confidence. Home owners will welcome the news of further reductions to repayments, with a loan of $300,000 likely to save around $47 a month.