RBA REDUCES CASH RATE TO 4.10%

The Reserve Bank of Australia (RBA) reduced the official interest rate by 25 basis points to 4.10% following today’s monetary policy meeting.

The move was widely expected, as annual inflation dropped from 3.6% in the September 2024 quarter to 3.2% in December – bringing it closer to the RBA’s target range of 2-3%. The full statement from the RBA is available to read here.

Lenders tend to move their variable interest rates in tandem with the RBA’s cash rate decisions, so when the cash rate declines, variable-rate mortgages tend to get cheaper.

That said, rate adjustments vary from lender to lender. Some lenders pass on the RBA rate cut immediately; others delay. Some lenders pass on the full RBA cut; others only part. Also, there can be variation within a lender’s own suite of products, with some lenders making larger cuts to some loan products and smaller cuts to others.

However, RBA rate cuts don’t affect pricing for fixed-rate loans, as those rates are locked in until the end of the term.

New borrowers tend to benefit from falling rates, because their borrowing power increases, which means they can qualify for larger loans. That, in turn, can increase buyer demand and put upward pressure on property prices.

On the flip side, anyone saving for a deposit tends to be negatively impacted by falling rates, because they earn less interest on their savings accounts.

Have a question on how the RBA rate cut impacts your situation?

Contact Amol from Juice Finance on 0435 040 986 or go to www.juicefinance.com.au and click ‘Get Started’ to find out more.