Cheaper Interest Rate Brings Relief

Published: September 02, 2008 - 08:12 PM

RBA Drops Official Rate .25% and major 4 follow

As expected the Reserve Bank today dropped the official interest rate by .25 points to 7%.

The major banks, Commonwealth, Westpac, National Australia Bank and ANZ immediately followed the Reserve Bank's lead by dropping their standard variable home loan interest rate by .25%. Australia's 5th biggest bank, St George, waited for the major banks' announcements and then dropped their own variable mortgage rate by the slightly higher margin of 0.3%. However, due to St George having raised their interest rate over the RBA's previous increases, their higher drop of today brings them more in line as compared to their major competitors for home loans.

The Commonwealth Bank now has the cheapest variable home loan interest rate of 9.33%. This compares to the other major banks standard variable mortgage interest rates with NAB and Westpac at 9.36% and ANZ with marginally the highest home loan interest rate of 9.37%. Compare this with St George's interest rate at 9.37% now puts them in the same bracket as the big four banks.

The cheaper official interest rate of 7% and the decision of the Commonwealth, Westpac, NAB, ANZ and St George to immediately pass on the interest rate drop will bring some relief for consumers and homeowners battling rising living costs.

David Power of ShopAround said that "Today's interest rate cut will help home owners and mortgage holders save money on their home loans. We recommend that whether you're buying a new home or re-financing your existing home loan, take the time to shop around and compare home loan interest rates and compare the mortgage rates on offer from all the banks and make sure you get the cheapest home loan deal possible. You can save thousands on your mortgage or home loan by taking time to compare the home loan interest rates on offer."

The commentary released by the Reserve Bank today suggests that we can expect more interest rate decreases over the next 12 months, some commentators suggesting four more interest rate drops are not unlikely. For consumers wanting to save money on their home loan this would be a welcome development compared to the high interest rates and continuous increases in interest rates for the past 7 years.

« Back to article list