100 Point Mortgage Interest rate cut in February gains momentum as depression fear grips RBA
10/02/2012 
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With the home loan and housing markets and residential home construction industry all plunging the Reserve Bank of Australia are now tipped to be lowering the official cash rate by up to one full percentage point on February 3rd 2008. This would bring Australia’s base interest rate to levels not seen since the 1960′s at just 3.25%pa
Should the banks pass on all the rate cut to home loan borrowers then on an average $250,000 mortgage homeowners would save $162 a month as their repayments fell 10 per cent to $1,458.
The cash rate has already been slashed by 300 basis points since September last year, reversing a dozen rate rises between 2002 and early 2008.
By the end of 2009 some experts are tipping the official cash rate will fall to 2%
And by the end of September 2009, the cash rate could hit a record low of 2 per cent, five economists say.
Westpac senior economist Justin Smirk said the RBA would have to slash interest rates by 100 basis points this time around to avert a prolonged recession, in concert with Federal Government stimulus programs.
Others are saying said the RBA would slash interest rates more aggressively in 2009 than it did during the last recession, starting with a 75 basis point cut in February.
The RBA has flipped over in the last six months from a fear of inflation, to a fear of depression, and the fear of a World recession turning into a depression will drive their decisions in 2009.
Rick Adlam has been helping clients with home loan finance since 1985 when he was home consultant with AV Jennings. Rick started Equity Home Loans in 1996 to help homeowners become property investors. Rick currently consults in the development of Mr Mortgage for mortgage brokers and HomeMate for new home buyers.
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