Reserve Bank of Australia chief Philip Lowe said the coronavirus is having a ‘significant’effect’ on the country’s economy
Australia’s major banks were predicting that the Reserve Bank of Australia (RBA) will slash the official interest rate from its current level of 4.35% during its Feb. 18 meeting.
NAB said that the confirmation of weaker-than-forecast price growth and a softer outlook for housing costs indicates a significant shift in economic conditions are the triggers behind the RBA to lower interest rates, SBS reported.
Australia’s mortgage rate rose from 6.09% in October to 6.11% in November 2024, marking the highest level recorded, after rising mortgage rates averaged 4.09% between 2019 and 2024.
The RBA’s cash rate, which is now 4.35%, has an impact on mortgage rates. The lowest mortgage rate in history was 2.63% in April 2022, indicating a notable rise in borrowing rates during the previous two years.
ANZ estimates that two cash rate reductions by the RBA are anticipated within a possible reducing cycle. Other banks, however, have made more aggressive cut predictions, with the NAB anticipating five cuts, while CBA and Westpac have expected four.
The most recent inflation data strengthened anticipating the RBA’s imminent rate cuts. The Australian Bureau of Statistice (ABS) reported that underlying inflation for the December quarter decreased to 3.2%, the lowest level since late 2021. This is a decrease from the prior quarter’s 3.6%.
A little 0.2% increase in the December quarter and a 2.4% annual increase were also recorded by the Consumer Price Index (CPI).
Canstar said that a 0.25% interest rate reduction may result in monthly mortgage repayments that are AU$92 lower for a AU$600,000 loan and AU$154 lower for a AU$1 million loan. Estimates say that an owner-occupier with 25 years left would pay principal and interest at an average variable rate of 6.33%. Additionally, the average new customer variable rate may drop from its current 6.24% to less than 6% as a result of the decrease.
