The Reserve Bank of Australia (RBA) has just set the record for its all-time lowest cash rate.
The RBA announced a 25 basis point cut to 1.25%, making official the speculation that the first rate alteration since August 2016 was the inevitable outcome of today’s meeting.
The consensus among economists is that the rate will be lowered by an additional 0.25% in the near future, a majority forecasting the second decrease to be implemented in August.
“The move by the RBA to cut rates was widely expected, and no doubt the focus will now turn to mortgage rates; how low will they go?” said CoreLogic head of research Tim Lawless.
Lenders have pre-emptively taken action in anticipation of today’s decision.
Canstar reports there were 531 interest rate moves in May, with 85% (449) of these being cuts to fixed rates.
As of June 3, one lender – Greater Bank – became the first to offer a mortgage at less than 3%.
“Mortgage rates for owner occupiers are already around the lowest level since the 1960s and lenders are generally expected to pass on most, if not all, of the cash rate cut to mortgage interest rates,” said Lawless.
“Overall, [this] should help to support an earlier than expected trough in housing values, but we aren’t expecting a rapid reversal in house price declines due to ongoing tight credit policies and, more broadly, economic uncertainty as global trade tensions escalate,” he concluded.