Interest Rate Cut by Reserve Bank
- Arnold Shields
- Nov 4, 2011
- 2 min read
Updated: Jun 11
The Reserve Bank of Australia (RBA) has lowered the official cash rate by 25 basis points to 4.5%, aiming to boost confidence and support the economy. Here’s why:
Global financial markets have stabilised slightly after recent volatility.
Australia's terms of trade, although peaking, remain historically high.
Signs suggest a global economic slowdown is underway.
Inflation has remained under control due to soft demand and the strong Australian dollar.
Unemployment has edged up and remains close to 5%.
Market interest rates have been declining, and competition among lenders is increasing.
The exchange rate, while volatile, remains at elevated levels.
This move is designed to maintain economic momentum and ease financial pressure on households and businesses.
How Will This Affect You?
Mortgage Holders
All major banks have responded:
Westpac: Cut standard variable rate to 7.61%.
Commonwealth Bank: Reduced variable rates by 25 basis points, now ranging from 7.66% to 6.86%.
ANZ: Lowered rates to 7.55%.
NAB: Passed on only 20 basis points, reducing rates slightly less than the RBA’s move.
Monthly repayment reductions:
Mortgage Size | Monthly Saving |
$250,000 | $32.71 |
$500,000 | $81.78 |
$750,000 | $122.67 |
With over 73,000 mortgage holders and 106,000 renters in Sydney under financial stress, this rate cut offers tangible relief. It also increases competition among lenders—further encouraged by the government's ban on mortgage exit fees.
💡 Over 167,000 households have switched lenders since exit fees were banned.
Self-Funded Retirees and Pensioners
Unfortunately, while borrowers benefit, savers may feel the pinch. Retirees relying on term deposits or cash savings will likely see reduced returns over the coming weeks.
Retailers and Consumers
Lower rates mean lower repayments, which could free up cash for discretionary spending—welcome news for retailers heading into the Christmas season. The hope is that this will help lift retail sales from their current sluggish pace, just one-third of typical growth.
First Home Buyers
The rate cut, combined with rising rents and fewer government incentives, is expected to nudge more first home buyers into the market.
Despite industry feedback that “rates may need to fall further,” the RBA's move could still shift sentiment and unlock demand from those previously hesitant due to economic uncertainty.
Final Thought
This rate cut isn’t just about numbers, it's a signal. A signal that now may be the time to review your mortgage, revisit your investment strategy, or consider entering the property market.
If you're unsure how this change affects your financial situation, speak to the team at Dolman Bateman. We’ll help you make informed decisions. confidently.
Disclaimer:
The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. While every effort has been made to ensure the accuracy of this content at the time of publication, tax laws and regulations may change, and individual circumstances vary. Dolman Bateman accepts no responsibility or liability for any loss or damage incurred as a result of acting on or relying upon any of the information contained herein. You should seek professional advice tailored to your specific situation before making any financial or tax decision.
