Homeowners received a very pleasant Christmas gift from the Reserve Bank last week, with the announcement that interest rates would be lowered for the second month in a row to the cash rate of 4.25 per cent.

 

 

 

The latest rate cut is believed to be one of the hardest decisions that the Reserve Bank has had to make in recent times, and it largely comes down to the uncertainty surrounding the global economic environment and the expanding debt crisis in Europe. The Reserve Bank also needed to make sure that Australia was covered for the next 2 months, as their next meeting won’t be held until February 7 next year.

While the global economic outlook might look dim though, the interest rate cut comes as great news for the property market and other Australian industries.

With most banks following suit and passing interest rate savings on to the consumer, the average mortgage holder with a $300,000, 25-year mortgage, can expect to save about $47 a month. Considering that a lot of homeowners are still enjoying the savings they received last month, the extra money in the bank will surely come in handy for Christmas, which is good news for retailers and local businesses too.

Though if you want to pay off your mortgage faster then it’s a good idea to continue paying the interest rate level that you were a couple of months ago, so you can watch your loan shrink faster and inevitably pay less interest in the long run.

Overall, for homeowners, homebuyers and sellers, the Reserve Bank’s decision to lower the cash interest rate to 4.25% is a very positive one and will surely have a positive flow on effect for the Armidale real estate market.