In good news for Melbourne mortgage holders, the RBA today lowered the official cash rate to 3.60%, down from 3.85%.
Australia’s Central Bank explained that the 0.25% cut decision was ‘unanimous’.
‘Updated staff forecasts … suggest that underlying inflation will continue to moderate to around the midpoint of the 2–3 per cent range, with the cash rate assumed to follow a gradual easing path,’ said the RBA today.
While the RBA rightly remains vigilant on the inflation front, this crucial metric is in an encouraging place – falling in the latest quarter to 2.1%, down from 2.4%.
Likewise, trimmed mean inflation – which strips out volatile price changes – is now at 2.7%, down from 2.9%.
So, in terms of the 2–3% RBA target band, inflation is looking good, with today’s drop very much expected – and needed – according to experts.
This is because a rate cut can stimulate spending across Australia’s economy – particularly as the latest unemployment figures crept up slightly.
Today marks the RBA’s third rate reduction this year, paving the way for more competitive rates across Australia’s lending market.
For mortgage holders with an average loan size of around $600,000, a 0.25% rate cut typically translates to annual savings of around $1080, or $90 a month.
In fact, a wave of home loan rates were cut in the lead up to today’s news – though ANZ bucked that trend by actually raising one of its variable rates.
Looking ahead, some financial institutions predict the official cash rate could settle around 2.85% by the time this current easing cycle concludes.
A sub-3.0% official cash rate will be music to the ears of many Melbourne home loan mortgage holders.
However, other industry experts are tipping this lowering cycle will land around the 3.15% mark, with just one or two reductions later this year.
‘Uncertainty in the world economy remains elevated, added the RBA, alluding to tariffs.
‘There is a little more clarity on the scope and scale of US tariffs and policy responses in other countries, suggesting that more extreme outcomes are likely to be avoided.
‘Trade policy developments are nevertheless still expected to have an adverse effect on global economic activity, and there remains a risk that households and firms delay expenditure pending still greater clarity on the outlook.
‘As in May, the forecasts assume that both effects weigh on activity and inflation in Australia for a period,’ the Central Bank said.
If you would like to review your mortgage arrangements, contact Mortgage Broker Melbourne.
We are one of the most positively reviewed mortgage brokers in Melbourne.
You can find out more in our recently published article on preparing for a rate cut.
Additionally, we can offer you tips on how to uncover lower rates, boost your savings, consolidate other debts, and take the pressure off increases in household costs.
Marc has been a professional lender for 28 years. After beginning his career in 1990 with a UK Building Society, he moved to Australia where he held several different retail banking roles. In 1999 it became clear to him that a mortgage broker would eventually become an obvious choice for someone looking for a home loan so he took the plunge and became an independent broker. He hasn’t looked back since!