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By Terry Ryder, 2nd October 2012
The Reserve Bank today delivered another interest rate cut. The RBA board announced a reduction of 25 basis points in the official rate, which is now down to 3.25%.
This follows reductions to the cash rate in both May and June.
ABC News 24 said today’s decision was a major surprise because most economists predicted there would be no cut. Clearly ABC journalists and their “expert” commentators have failed to notice the appalling record economists have in correctly predicting interest rate decisions.
The decision will boost markets that are on the cusp of a recovery, particularly in our biggest cities. It will also be the catalyst for prospective buyers who have been fence-sitting.
But the key factor, once again, is the degree to which this cut will be passed on to borrowers by major lenders.
Folllowing the 0.5% RBA cut on 1 May, most major lenders passed on about 0.35%. Since September 2008, major lenders have withheld more than 0.7% in interest rate reductions.
ENDS
Terry is the owner and creator of hotspotting.com.au, which provides information to property investors on how to identify emerging markets before they’re common knowledge.
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