At its meeting today, the Board decided to lower the cash rate by 50 basis points to 3.75 per cent, effective 2 May 2012. This decision is based on information received over the past few months that suggests that economic conditions have been somewhat weaker than expected, while inflation has moderated.

As a result of changes to monetary policy late last year, interest rates for borrowers have been close to their medium-term averages over recent months, albeit tending to increase a little as lenders passed on the higher costs of funding their books. Credit growth remains modest overall. Housing prices have shown some signs of stabilising recently, after having declined for most of 2011, but generally the housing market remains subdued. The exchange rate remains high even though the terms of trade have declined somewhat.

In considering the appropriate size of adjustment to the cash rate at today's meeting, the Board judged it desirable that financial conditions now be easier than those which had prevailed in December. A reduction of 50 basis points in the cash rate was, in this instance, therefore judged to be necessary in order to deliver the appropriate level of borrowing rates.

Interest rates for borrowers remain close to their medium-term average. Credit growth remains modest. Housing prices have shown some signs of stabilising recently, after having declined for most of 2011, but generally the housing market remains soft. The exchange rate has remained high over recent months, even though the terms of trade have declined somewhat.

At today's meeting, the Board judged the pace of output growth to be somewhat lower than earlier estimated, but also thought it prudent to see forthcoming key data on prices to reassess its outlook for inflation, before considering a further step to ease monetary policy.

Taken from the Reserve Bank Media Release Statement.

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At its meeting today, the Board decided to leave the cash rate unchanged at 4.25 per cent.

Interest rates for borrowers have generally risen slightly since the Board's previous meeting, but remain close to their medium-term average. Credit growth remains modest. Housing prices have shown some sign of stabilising recently, after having declined for most of 2011, but generally the housing market remains soft. The exchange rate has risen over recent months, even though the terms of trade have declined.

With growth expected to be close to trend and inflation close to target, the Board judged that the setting of monetary policy remained appropriate for the moment. Should demand conditions weaken materially, the inflation outlook would provide scope for easier monetary policy. The Board will continue to monitor information on economic and financial conditions and adjust the cash rate as necessary to foster sustainable growth and low inflation.

Sandra

From the RBA Media Release Statement.

If you have any questions please don't hesitate to call us on 47236000.

The scheme offers a $10,000 non-means tested grant to Queenslanders who are buying or building new homes or units priced at less than $600,000.

As of 11 Jan, only 3728 of the 14,000 grant applications had been awarded.

Applications were due to close at the end of this month.

Watch this space....

This is more than a fair question, we do see and hear a lot about this in the media, but like anything that we hear (i.e. believe none of what you hear, and believe half of what you see :) ), we need to take a balanced approach. I imagine the bank will make this decision in good time, but irrespective of their decision, we will see them as the well-established, profit making machines that they are (unashamedly so). This should not be news, but they are publicly listed companies, looking to make money, not friends (contrary to their advertising campaigns J).

What is not helpful to the mortgage industry or your home loans as a whole, is the most recent banter from the Treasurer Wayne Swan. As he has been many times before, he is disturbingly simplistic and misinformed on this topic. He has been claiming all day that if you are not happy with the rates with the four majors at around 7.5% or so, you should move to one of the other banks that have already dropped their rates.

Firstly, OMG, if you are still on a Standard Variable rate (SVR), without a discount of some description CALL ME IMMEDIATLEY!!! Most people (with good guidance) should never be paying the SVR, that is they should be receiving a discount below it, or be on a ‘Basic Variable’ (lower rate, with slightly lesser features).

I have said it many times before, but a simplistic approach to banking and the approach taken to refinancing (for the sake of refinancing as Wayne is suggesting) is VERY RARELY in the clients’ best interest (which should be the sole purpose for any move). You are not changing underpants here…. you are restructuring a major financial commitment and the associated fees and charges are MORE OFTEN THAN NOT, higher than the ‘simplistically suggested, knee jerk’  gain claimed.

If Wayne Swan wants to have an actual effect on the true ways of getting better pricing for clients, we should be looking to better competition, rather than hit the media with misguided and ill- informed sound bites for political gain, with no gain for the customer. Perhaps (with the risk of talking about spilt milk) had he not made ill-informed moves around two to three years ago in other knee jerked reactions with deposit guarantees (for the BIG FOUR ONLY MIND YOU!!), we would not be in the position we are in now (more than happy to explain if you would like to chat..).

I do not often rave on about this style of information, but I feel it is imperative that the main reason for a move between banks not be a politically fuelled ‘brain fart’ based sound bite, but rather a well-informed, individually client based decision making process.

As always, happy to chat….

At its meeting today, the Board decided to lower the cash rate to 4.25 per cent, effective 7 December 2011.

The reduction in the cash rate as a result of the Board's previous decision flowed through to lending rates, which are now around their average level of the past 15 years. Short-term market interest rates have tended to decline a little further in recent weeks, though term funding conditions for financial institutions have become more difficult. Credit growth remains subdued and asset prices have declined further over recent months. The exchange rate has been quite variable over the past few months, but remains at an historically high level.

Overall, the Board concluded, on the basis of all the available information, that the inflation outlook afforded scope for a modest reduction in the cash rate. The Board will continue to set policy as needed to foster sustainable growth and low inflation over time.

Please contact Dave Lamari if you would like him to answer any questions you may have for him. Ph 47236000.

From the RBA Media Release Statement.

Taken from the RBA website.