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The Reserve Bank of Australia (RBA) has affirmed industry predictions by cutting the official cash rate at its August board meeting.
The 25 basis point rate cut takes the cash rate to its lowest point ever – with the rate now sitting at just 2.5 per cent.
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RBA governor Glenn Stevens said the rate cut was a wise move for the board, as data released earlier this month showed headline inflation was considerably weaker than had been expected.
Loan Market’s director, Mark De Martino, said the 25 basis point was a good move and, provided that the lenders follow suit, it could save homeowners approximately $60 a month on a $300,000 mortgage.
“And for those looking to purchase a new home, these lower rates are going to encourage buying; however, I would caution those looking at a home loan to understand interest rates aren’t always going to be this low,” Mr De Martino said.
He added that a savvy strategy for those looking to pay off their home loan faster and with fewer interest charges would be to maintain their repayments at the same level they were paying before the rate cut.
“If you're conditioned and comfortable to continue making repayments at the level they’re at prior to the rate drop, you can pay off your home faster and put more equity in your home by keeping the same repayments,” he said.
