What Does All The Interest Rate Cuts Mean?

By Shane | News

Dec 09

The Interest Rate Cuts from the Reserve Bank of Australia have different effects on society. The four major banks have managed to answer these changes implemented basic standard variable mortgage rates one after another.

Many, but not all, would benefit from this interest rate cut changes. There still some that would not be benefited or feel that these changes would be a disadvantage on their part. The interest rate cut is a very important move because as we know, there are so many borrowers in Australia and most of them are having difficulty when they are already dealing with the housing repayments. The level of indebtedness in Australia is also increasing and it also means that the interest rate cut has a stronger impact than it used to be in previous years.

Many Will Be Benefited With These Rate Cuts And They Are The Following

It Is For The Businesses

If the interest rates are lower, it will only mean that households with mortgages will have more cash to spend on other things.

Real Estate Agents Will Benefit From The Interest Rate Cuts

It is hard to work in the property market if the house prices continuously drop. However, because of the rate cuts, this will help stabilize the prices in the market.

It Will Also Be An Advantage For The Exporters

The rate cut will most probably cause the Australian dollar to lower down. This will benefit businesses who export their products to foreign countries including miners and farmers as they will also be receiving Australian dollars in exchange for selling their goods.

For The Property Owners

The rate cut will help stabilize price drops in the previous years. It is because high-interest rates will cause house prices to lower down, as people in return, will not be able to afford or to repay for their loans. When there is a rate cut, people will be able to borrow more and this will help improve prices in the property market. However, because of the lowering prices in the property market, the rate cut will likely cause prices to stabilize.

While The Rate Cuts Are More Of An Advantage, Some Will Still Be Consider This As A Disadvantage.

For The First Home Buyers

Though first home buyers will be able to borrow because of the low-interest rates, it will still be hard for them to obtain a property. As we have mentioned earlier, rate cuts will likely stabilize prices in the property market and this is not a good thing for the first home buyers.

First home buyers will also find it hard to save for a deposit as banks will most probably cut interest rates on their savings accounts.

It Will Affect The Savers

A savings account will be affected as the interest income will be affected because it will be expected that the banks lower interest payments.

And Some Won’t Have A Significant Effect

For The Retirees

Retirees will not be greatly affected except for the fact if they are only relying on income from savings accounts.

Credit Card Holders

As credit cards are not connected to Reserve Banks rates, so don’t assume that the rate cut will affect your credit card interest rates.

Author: Shane

About the Author