The official interest rate is now 3.5 per cent.
The 25 basis point fall comes after a big 0.5 per cent cut last month that, as yet, has failed to make an impact.
“The softness in the non-mining sectors of the economy has forced the Reserve Bank to move again today” says Domain property expert Carolyn Boyd. “Many people are hurting and have been hoping the Reserve Bank would make the decision it has.”
Each 0.25 per cent drop in interest rates slices about $60 off the monthly interest cost of an average Australian mortgage.
The cut may not be the last for the year. It has been predicted the Reserve Bank will cut rates by as much as 1 per cent this year, taking the official rate as low as 2.75 per cent.
The big question now is, just how much of today’s rate cut will lenders pass on? Last month the average cut delivered was 0.38 per cent, despite the Reserve Bank slashing rates by 0.5 per cent.