 Interest rate decision tomorrow
Official interest rates could fall by 0.5% to 2.75 per cent when the Reserve Bank meets tomorrow.
Many economists are predicting the central bank will reduce rates as the economy struggles on. However, the banks have not indicated whether they will pass on the rate cut to home owners.
In the previous months, the RBA has slashed the cash rate by 400 basis points and home loan rates have been falling too.
Cameron Clyne, NAB's CEO, said recently the bank could not guarantee it would pass on any rate cuts due to higher costs of funding. "If we take responsible steps to address this and do not pass on the full amount of any future RBA cut, I expect to cop criticism for that," Mr Clyne said.
ANZ and Westpac have given no indications of passing on a rate cut, while NAB and CBA have already warned that they cannot guarantee they will pass on any rate cut to homeowners.
Last month the Reserve Bank board voted to keep official interest rates as they are, at 3.25 percent, but with rising unemployment figures and a slow housing market, the RBA is expected to cut rates tomorrow.
Cutting the cash rate by a further 50 basis points from 3.25 percent to 2.75 percent would drag interest rates to an all-time low - under the record low of 2.89 percent in January 1960.
Last August, the official rate sat at 7.25 per cent, with home loan rates nearing 10 per cent. In the past six months rates have fallen by 4 per cent with home loan rates falling by almost as much.
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