Merry Christmas – another Interest Rate cut!

The Reserve Bank has delivered an early Christmas gift to home buyers by cutting its key interest rate for the second month in a row. 

If passed along in full by the banks, an average Victorian home buyer will save about $50 a month after the Reserve Bank reduced the official cash rate by 0.25% to 4.25% p.a – the first back-to-back monthly cuts since April 2009.

Colonial First State Global Asset Management analyst James White said the RBA’s decision was unsurprising given the financial market volatility of the past month.
 
The RBA noted that while the previous rate cut had reduced credit costs, conditions remained difficult for many.

“The reduction in the cash rate as a result of the Board’s previous decision flowed through to lending rates, which are now around their average level of the past 15 years,” said RBA Governor Glenn Stevens in a statement.

The Reserve Bank board is not due to meet again to set interest rates until February 7 next year.