May RBA Rate Update

The Reserve Bank of Australia has announced a cut to the cash rate by 50 basis points down to 3.75%. It seems the economy is in dire need of a decent kickstart which may mean  the central bank has decided fundamentally that the Australian economy needs more stimulus to keep it humming along. This time around most of economists forecast the RBA to cut rates by 25 basis while some suggested 50 basis points. They were all on the money. The RBA suggested that housing prices are signalling stabilising  prices in recent months, after having declined for most of 2011, but generally the housing market remained subdued.

The RBA rates are have dropped BUT will the banks pass it on??  Remember you can take action by comparing what rate you are currently paying versus the competition. Stay pro-active to avoid being left in the herd. Consider that a bank passes on the full 50-basis-point cut for a loan of $300,000 say at a 7.25% interest rate, over a 25 year loan a borrower would save around $96 per month or just over $1,152 in a year.

Check out the latest interest rates, save on your loan here.