| 05.05,12. 06:28 PM |
Experts tip more rate cuts to come
May 05, 2012
HOMEOWNERS are in line for a wave of interest rate cuts this year after the Reserve Bank dramatically downgraded its growth forecasts.
Only days after slashing rates to their lowest level since the height of the global financial crisis, the RBA yesterday paved the way for another round of rate cuts.
Some economists are tipping the first of three more cuts could come as early as next month with the official cash rate now expected to fall 75 basis points to a low of 3 per cent by December.
The RBA's quarterly statement on monetary policy warned that the jobs and housing sectors were weakening as the global economy grows at below trend and Europe struggles to climb out of recession.
Experiencing the worst market conditions in decades, the property industry expects this week's 50 basis point cut to be a catalyst for a slow and steady recovery of the market - with the first test at open inspections across the state today.
Real Estate Institute of SA chief executive Greg Troughton was pleased that three of the big four banks have cut their rates, but warned it would take time for the reduction to translate into home sales.
"The market has been the toughest it has been for some decades but I think that the interest rate cut might encourage buyers to start signing contracts rather than kicking the tyres," he said.
Westpac and BankSA reduced their standard variable rates by 37 and 38 basis points respectively yesterday, both to take effect on May 14.
They followed NAB and Commonwealth, which cut their variable rates by 32 and 40 basis points earlier in the week. ANZ will reveal its move next Friday.