The Reserve Bank has kept the official interest rate at a record low 1.5% but economists and stakeholders still predict at least one rate cut by August – which could save home buyers up to $708 a year on a $400,000 loan, helping to ease household budget pressures.
The Finder RBA Cash Rate survey shows 84% of the 40 experts surveyed believe there will be an official interest-rate reduction in the next three months and almost three-quarters of those predict the cash rate will drop to 1% by the end of the year.
REA Group, the company behind realestate.com.au, says when the rate cut does come, it is likely to be passed on in full by the banks and will be good news for house prices. “We’re still likely to see a cut before July,” REA chief economist Nerida Conisbee says.
The main driver of a cut is to manage the low rate of inflation which is currently at 1.3% year-on-year, well below the RBA target of 2-3%.”
For a homebuyer making repayments on a $400,000 loan at a current rate of 4.36%, that could save more than $1,400 a year if the official rate is cut to 1%.