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How are banks reacting to the cash rate cut?

Date Posted: Feb, 2015

By Rich Harvey, CEO, propertybuyer.com.au

As you all saw last week, the Reserve Bank of Australia (RBA) cut the official cash rate by 25 basis points. Anyone who's been searching for the right Australian property investment will be salivating at the potential for interest rates to come down, as highlighted by RBA Governor Glenn Stevens.

"Credit growth picked up to moderate rates in 2014, with stronger growth in lending to investors in housing assets," he noted. A lower cash rate may lead to banks cutting their interest rates, furthering this growth. So: Who's playing 'Follow the Leader'?

Big banks buckle down

Out of the Big Four financial institutions, it was the Commonwealth Bank that blinked first, announcing a cut to many home loan products within 24 hours of the RBA announcement. This included the standard variable rate experiencing a reduction to 5.65 per cent – the lowest it has been since April 2009. 

In addition to this, the National Australia Bank, Westpac and ANZ all introduced interest rate cuts. This was a move also completed by smaller institutions like the Bank of Queensland and the Bendigo Bank. With such swift changes to interest rates, the landscape for property investment in Sydney may change somewhat.

I think we're going to see even more people getting amongst the property investment game, especially since CoreLogic RP Data monthly indices show that in the last year, Sydney has experienced 13.04 per cent value growth in property – despite a predicted slowdown.

What to do with the interest rate cuts? 

Low interest rates will likely have people champing at the bit to hook into a home loan and buy a property. But trust me, this would be a rash decision to jump into. Remember – you're not the only person with the bright idea to take advantage of low interest rates and make an investment. You need an edge, and you can get that by working with a buyers' agent

Here at Propertybuyer, we're Australia's most awarded buyers' agency, and for good reason – we're experts. We take in every piece of information available to us and turn it into invaluable advice when you decide to buy a property. 

For example: If you look at SQM research's Stock on Market reports, you can see that while the amount of available property in Sydney is on the decline, Brisbane still has a wide range of buildings and homes to choose from.

Want to find out more details? Check out our free reports or come and speak to us today.