PHOTO: Interest rate cuts ease the burden of repayments of those with existing mortgages, but rob savers and put downward pressure on the Australian Dollar, making imports more expensive
- Online lender cuts variable mortgage rate to 1.79 per cent, the lowest known
- Front-running Tuesday’s expected RBA cash-rate cut from 0.25 to 0.1 per cent
- Low interest rates help those with existing mortgages with smaller repayments
- Double-edged sword penalises savers, puts downward pressure on the currency
- RBA may expand bond-buying, quantitative easing: ‘economy on a knife edge’
A small online lender has dropped its home loan interest rate to the lowest on record in Australia ahead of the Reserve Bank of Australia’s expected rate cut on Tuesday.
Homestar Finance has cut its variable home loan rate to 1.79 per cent, which is believed to be the lowest ever rate available in Australia’s home finance market.
The slashed rate is aimed at refinancers, and available to borrowers with a loan-to-value ratio of 60 per cent, limited to amounts of up to $850,000.
The RBA (pictured) is expected to cut the cash rate to 0.1 per cent on Tuesday
Economists expect the Reserve Bank of Australia (RBA) to cut the cash rate at which banks lend to each other from 0.25 per cent to 0.1 per cent when it meets on Tuesday, lowering lending costs for bankers.
Australian Banking Association chief executive Anna Bligh said lenders would try to pass on as much of the rate cut as they could.
‘We need to remember that it’s not only borrowers who are customers but also people who have savings and deposit accounts, and they’re getting very, very low rates. So banks will want to balance all of that out,’ she told News.com.au.
Interest rates have never been lower in Australia, and this is usually reported as good news – however it is a setting that creates both winners and losers.
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