Home loan rates tumble as RBA slashes cash rate by 1%
27/12/2011 
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Australia’s financial markets were taken by surprise when the tipped 0.5% cash rate reduction was doubled to a massive 1%pa reduction to 6%pa.
According to Mr Mortgage said that this was the largest rate reduction since the early 1990′s and shows that the last interest rate rise was one too many, and that the RBA is now moving agressively to prevent the US financial crisis from affecting the Australian Economy.
The bad news is that the major lenders aren’t likely to pass on the full 100 basis-point cut to their customers, blaming their own rising borrowing costs on overseas money markets, so you might have to shop your mortgage to get a better rate.
In response to the RBA cut, both Westpac and CBA said it would lower its variable home loan rate by 80 basis points, or 0.8 of a percentage point, from Monday, while Aussie Home Loans plans to cuts its lending rate by as much as 75 basis points. National Bank and ANZ Bank said they were reviewing their rate
This rate reduction should be a shot in the arm for retailers, and will build confidence in the house building sectors as home buyers get their heads around the new rates that will be flowing in the mortgage markets over the next few days.
Other are predicting the RBA’s official cash rate is could be heading to as low as 4% over the next couple of years
The main reason for the such a deep cut bythe RBA was the board’s assessment that it was unlikely that some of Australia’s commercial banks would not be passing on the full rate cut because they their margins were suffering from backlogged overseas finance markets.
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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