Deteriorating global economic conditions have made it appropriate for the Reserve Bank of Australia (RBA) to lower official interest rates for the second successive month, says leading mortgage broker Priority Lending.
Priority Lending Chief Operating OfficerDean Rushtonsaid consumers would welcome a further 0.25 per cent rate reduction in the cash rate to 4.25 per cent.
“The back-to-back quarter percentage point rate cuts means someone with an average mortgage of $300,000 will save around $100 a month if their bank passes it on in full,” he said.
“This is a welcome move by the RBA in the lead up to Christmas and an appropriate course of action.”
Mr Rushton said the RBA may need to make further rate cuts early next year if the situation in Europe worsens.
“A recent survey we ran showed that the issues occurring inEuropewere top of mind for Australian consumers when considering their financial position,” Mr Rushton said.
“These issues are not going away short term and there will be more work to do to stimulate sectors of our economy.
“Consumer confidence has been low and we’ve seen people holding off spending and borrowing in most sectors as we approach Christmas.”
Mr Rushton said the housing finance market had shown some improvement in recent months which the rate cut will further assist.
“The last 12 months have definitely been the most challenging the home finance sector has experienced in the past decade,” he said.
Source: Priority Lending