 Home loan interest rate cuts
Will your home loan rate fall if official cash rates are cut again in December? Following three consecutive interest rate cuts from the Reserve Bank of Australia (RBA), banks and credit unions varied in their response to pass on the savings to customers. Some moved quickly, while others made home owners wait several weeks for the savings. And not many passed on the full reductions.
Currently, home loan rates sit around 7.74% while ofificial rates have fallen to 5.25% and are tipped to fall again next month. The major banks and non-bank lenders passed on most of the last official rate cut to home owners.
The Commonwealth Bank, ANZ, Bank Of Queensland, BankSA, NAB and St George Bank have standard variable rates of 7.74%.
BankWest 7.65% - RAMS 7.59% - Westpac 7.71% - Bendigo Bank and Suncrop Metway offer 7.80% on their standard variable mortgage rate.
ABN Amro chief economist Kieran Davies said a shrinking Australian economy, falling asset prices and recession-like levels of business confidence will make the RBA more inclined to cut rates aggressively.
"The wealth effect of falling asset prices is snowballing and the Chinese economy is slowing very sharply,'' he said.
"Also, we think the economy is contracting now. We are close to zero.''
A 125 basis point rate cut in December would take the cash rate to 4 per cent.
The RBA meet again on 2 December, and if the cash rate is cut by 125 basis points, it would be the biggest cut since April 1990, when the RBA slashed the then 16.5 per cent cash rate by 1.5% as the Australian economy entered into a recession.
The cash rate was at 4.25 per cent in late 2001 and has not been below that level since the RBA began publishing its cash rate target in 1990.
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