The RBA announced yesterday a rate cut of 25 basis points bringing the interest rate to a historic new low of 1.75%.
GAIN FOR MORTGAGE HOLDERS
While three of the top four banks have passed the rate on in full, ANZ customers (myself included) won’t be so happy as ANZ only passed on a .19% cut, using the excuse they have recently had a profit slump.
NAB announcing first, followed shortly by Bank of Queensland, Westpac, and Commonwealth Bank. All banks are looking to pass through this saving.
According to Canstar, the RBA decision will save a typical homeowner $72 a month on a $500,000 loan, bringing the average standard variable home loan rate down to 4.52 per cent.
RBA governor Glenn Stevens said last week’s surprisingly weak inflation data was behind the move which is in sharp contrast with the budget growth figures released last night which were closer to 3% which is quite a good result. This was of interest to me in particular. I’ll be following this closely and keeping our Profolio readers up to date.
However, there are many other drivers pushing the interest rates to remain low, such as low labour cost growth and low international growth.
A BLOW FOR SENIORS
Self funded retirees will be feeling the heat with a double blow with the changes to age pension soon to be in place potentially seeing their pensions drop, plus the reduction in interest rates, meaning money in the bank and term deposits will be fetching even lower returns.
Retirees relying on bank savings, stand to lose as much as $1250 on a 12-month term deposit of $500,000, or $625 on a $250,000 term deposit.