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ISCOVER
Jessica Darnbrough
With the latest data from the Australian Bureau of Statistics showing the Australian economy is not performing strongly, there is a good possibility that the Reserve Bank will choose to cut the official cash rate again at tomorrow's board meeting, according to RateCity’s Michelle Hutchison.
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“The latest figures from the Australian Bureau of Statistics showed that retail spending dropped by 0.20 per cent in April compared to March. A rate reduction could help improve consumer confidence and therefore drive spending,” Ms Hutchison said.
“The current average standard variable home loan rate is now 6.61 per cent, but most borrowers are already paying less than that after discounts. A 25 basis point rate cut would therefore mean borrowers could expect to see variable rates in the low 6 per cent to high 5 per cent range. If lenders pass on the full 25 basis points cut, monthly repayments for a $300,000 mortgage would drop by $49.”
But Ms Hutchison said even if the Reserve Bank cuts the official cash rate again tomorrow, it is unlikely that all or any of Australia’s lenders will pass on the rate cut in full, as they seek to recover higher funding costs.
Last month, just three lenders chose to pass on the rate cut in full – Defence Bank, Unicredit WA and Macarthur Credit Union.
“If the Reserve Bank drops the cash rate on Tuesday, it’s likely that lenders won’t pass on the full rate cut to their variable rate home loan customers, as most lenders in RateCity’s database have moved out of cycle or not passed on the full cuts over the past year,” she said.
