RBA Cash Rate has been Reduced

The RBA has reduced the official cash rate for the first time in two and a half years, dropping it by a quarter of a percent. The Big Four banks have followed suit with interest rate reductions – CBA, Westpac and ANZ all reducing their standard variable rates by 0.25% while NAB dropped only 0.20%, although it still retains the title of the lowest variable rate of the Big Four. Naturally, many of the best deals aren’t found with the big banks, and with many borrowers’ having unique needs and situations, most of the smaller lenders have the better options. And now they have also reduced their rates, keeping it a fairly level playing field, with changes taking effect generally around the middle of the month.

This reduction has made some offerings extremely attractive for either fixed or variable preferences throughout the mortgage market, with special mention to some of the smaller lenders who have some innovative products if you know where to look. Now, there are fixed rates starting below 6% for one year, and many normal variable interest rate now being offered between 6.7% and 6.9%.

This expansion of monetary policy, coupled with loosening of some banks’ lending policies, such as a new 98% LVR offering compared with the market norm of 90%-95%, or the reduction in proofs required for some low doc applications, plus the fact that housing prices have still not improved significantly, all seems to point to the result that the market for borrowing has become far more appealing and accessible to just about everyone, including first home buyers and the self-employed, than it has been in some time.