Holiday Cheer from Reserve Bank as it cuts rates by 0.25% to 4.25% - but what does it mean to you?

In today’s Reserve Bank Meeting the RBA has reduced the cash rate by 0.25% to 4.25%.

We now must all sit and wait for the banks to pass on the full rate reduction, after much speculation in the press that they were not going to pass on the full rate cut and therefore not giving home owners the relief they are seeking.

Watch this space for any updates.

WHY?

The current crisis in Europe is deeper than what we are reading in the papers, this is the reason why the major central banks came together last week to put together a decisive action to provided liquidity in the bond market. By cutting rates, the Reserve Bank would be looking at staying ahead of the looming crisis.

Whilst the share market got a relief rally last week from the Central bank’s actions, it still does not remove the fact that domestically, a lot of Australian households are struggling to meet their day to day living costs. As a result, discretionary retail spending is still low. In its bid to resuscitate spending, the RBA has decided to give local retailers a bit of a helping hand by reducing interest rates.

What does this mean for you?

If banks pass this on

• On a $300k mortgage – savings of $60 per month!
• Housing more affordable
• Kick start the economy
• Interest on savings reduced

 Other effects

• Potential lower Aussie Dollar
• Increased Confidence
• More spending for Christmas trade (Potential win for retailers) and not having to hear the continual whine of the woes of retailers

Therefore, this rate cut would not only revive some retailers, but it could also reduce the interest costs for many numerous small businesses and households.

Lenders are still offering great fixed rates, well below the variable rates – some of these are very attractive.

Contact us today about your current home loan and see if you are on the most competitive package and product to suit your needs. Call us on 02 92902777 or click here to set up a complimentary financial health check.

Looking forward to hearing from you soon.

MICHAEL LUCA
Mortgage Broker

Suite 701, Level 7, 14 Martin Place Sydney NSW 2000
GPO BOX 4013 Sydney NSW 2001
P: +61 2 9290 2777
D: +61 2 8203 0426
M: 0405 113 543
F: +61 2 9262 5788
E:Michael.luca@liquidityfinance.com.au

Read the RBA Statement here:http://www.rba.gov.au/media-releases/2011/mr-11-28.html