Reserve bank drops cash rate to 3.6 percent relieving homeowners

ABC NEWS (Australia)

After last month's un-expected hold borrowers finally have some relief, with the reserve bank delivering its third interest rate cut this year. The official cash rate dropped a quarter of a percentage point to 3-point-6 percent. The big four and many other banks have passed on the savings cutting their variable home loan rates. The much-anticipated drop will save homeowners with mortgage hundreds annually and it may not be the final one for the year.

Transcript

00:00A long-awaited decision set to ease some pressure for households with a big mortgage.

00:08The Reserve Bank reducing the cash rate by a quarter of a percentage point,

00:12taking rates to their lowest level in more than two years.

00:15The forecasts imply that the cash rate might need to be a bit lower than it is today

00:20to keep inflation low and stable and employment growing,

00:23but there is still a lot of uncertainty.

00:25Today's very welcome decision on interest rates gives us confidence that we are on the right track,

00:31but obviously, as always, there's much more to do.

00:34It means less financial stress for optometrist Ann Quinn Tran,

00:38who's been working seven days a week as cost of living remains high.

00:42I don't go out a lot because I work a lot as well.

00:46I would say cut out on maybe going to the theatre.

00:50She says her customers are feeling it as well.

00:53I find that everyone's spending is a little bit more cautious.

00:56Assuming lenders pass on the rate cut in full,

00:59homeowners with a $750,000 mortgage will see their repayments for, on average, by $111 a month,

01:07bringing their total monthly savings to $340, since the RBA started cutting rates in February.

01:14Last month, only three members of the RBA board voted in favour of a cut.

01:18This time, the decision was unanimous.

01:21However, Michelle Bullock has warned that because the RBA didn't lift rates as high as other countries,

01:25there might not be room to cut rates much further.

01:28Leaving economists divided on how many more rate cuts there will be.

01:33I think the RBA is very cautious about not lowering interest rates too quickly,

01:37for fear that if they lowered them a bit too quickly,

01:40they might have made the wrong decision and therefore might have to lift them.

01:43I think at least one, maybe two, could even be three more 25 basis point cuts before they're done.

01:49Money markets are tipping there could be another rate cut by Christmas,

01:53unless trade tensions around the world turn out to be more unpredictable than initially thought.

01:58I think the RBA has been to 24 days before the modification of the RBA's

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