2nd July 2019 / Beth Oleyar: The Reserve Bank of Australia Cuts Interest Rates to Historic Low of 1%

The Reserve Bank of Australia has just announced that interest rates have been reduced by a 0.25 percentage point drop, making it the lowest rate cut in Australian history.

Down to 1% from 1.25%, RBA Governor, Phillip Lowe, said the cut was to 'support employment growth' and generate 'greater confidence' in the Australian economy.

Marking the second month in a row for these cuts, economists believe a third rate cut could be expected as soon as Christmas. The ABC has echoed this assumption, suggesting 'yet another interest rate cut by the end of this year, which would bring the cash rate down to 0.75 per cent'.

In a bid to support the housing market, households are expected to welcome the reduced payments. Tweed Daily News has reported that the average home loan customer would save between $600-$1,000 per year on their mortgage repayments if the banks decide to pass this cut on in full.

In response, CoreLogic Head of Research, Tim Lawless, said that the cuts to the cash rate last month had already helped boost housing demand.

Mortgage Choice CEO, Jacqueline Dearle, also commented on the RBA move, saying 'should the rate cuts be passed on, this will lower mortgage rates to make housing more affordable and subsequently give the property market a nudge in the right direction'.