Cairns homeowners given hope with interest rate cut
Economists were on the money with the Reserve Bank of Australia (RBA) deciding to cut interest rates by 25 basis points today.
The pre-Christmas rate cut could save the average homeowner $50 a month if passed on in full by banks.
Cairns economist Bill Cummings said the cut would provide increased consumer confidence and spending over the Christmas and New Year period.
Real Estate Institute of Queensland (REIQ) CEO Anton Kardash said the rate relief would also assist the struggling Queensland property market.
“The Queensland market has been improving throughout this year, which can partly be attributed to lower interest rates,’’ he said.
‘‘More importantly, though, confidence levels have improved and pent-up demand is starting to be released through increased sales activity.
‘‘We are also experiencing tighter stock levels in some areas as demand increases, but also because lower rates means some sellers are in a better financial position and no longer need to sell.’’
Brinsmead investor Mal Chadwick has two mortgages and said the pre-Christmas cut would be welcome relief.
"I recently bought another house and rented my previous house out," he said.
"I'd be most pleased... From the investment property perspective the decrease in the interest rate will mean a decrease in expenses and a smaller loss."
The cash rate now sits at 3 per cent - the lowest level since the global financial crisis.
Reserve Bank governor Glenn Stevens said in a statement the board decided to lower rates in line with the Australian and global economy.
‘‘This will help to foster sustainable growth in demand and inflation outcomes consistent with the target over time,’’ he said.
‘‘Recent data suggest that the US economy is recording moderate growth and that growth in China has stabilised. Around Asia generally, growth has been dampened by the more moderate Chinese expansion and the weakness in Europe.”
While the four major banks are yet to move their variable mortgage rates, The Bank of Queensland was the first bank to respond to the cut, reducing its variable home loans by 20 basis points.
The BOQ will cut its standard variable home loan rate to 6.51 per cent from December 21.
ING Direct passed on the rate cut with their variable rate of 5.72 per cent to become effective from Christmas Eve.
The RBA board, which will meet at 2.30pm today, has cut the cash rate three times so far this year by a total of 200 basis points.
Last Christmas, rates were cut to 4.25 per cent.
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Fingers crossed: Mal Chadwick says an interest rate drop will result in a smaller loss for his investment property. Picture: STEWART McLEAN