Cuts raise business hopes

Written By Unknown on Rabu, 07 Agustus 2013 | 14.56

HOME loan customers are celebrating after the big banks passed on the Reserve Bank's 0.25 per cent cut to official interest rates yesterday.

Three of the four major banks shrugged off recent tardiness to announce they would cut their standard variable home loans, after the RBA slashed the official rate to a record low 2.50 per cent.

The savings provided a sweetener for Tasmania's ailing economy, with the building industry, small business and the retail sector welcoming the move.

NAB and the Commonwealth Bank passed on the full 0.25 per cent cut, but Westpac went further, with a 0.28 per cent reduction.

The ANZ is expected to announce its move on Friday.

NAB's new standard variable home loan is 5.88 per cent, the CBA's 5.90 per cent and Westpac's 5.98 per cent. ANZ's current rate is 6.13 per cent.

The latest cut -- the eighth RBA reduction since November 2011 when the official rate was 4.50 per cent -- will deliver a monthly saving of $45 on the average $300,000 home loan.

Hopes were also raised by analysts' predictions of a cut before the end of the year.

Premier Lara Giddings said it would give households the confidence to spend more and help to stimulate job creation.

"Cutting interest rates is a proven way of stimulating the economy," Ms Giddings said.

The Housing Industry Association predicted the latest cut would kickstart a fledgling residential construction recovery.

HIA senior economist Shane Garrett said borrowers had enjoyed significant savings over the past 2½ years.

"On a $500,000 mortgage with 30-year term, the monthly repayments have fallen from $3300 in January 2011 to $2679 today," Mr Garrett said.

Real Estate Institute of Tasmania president Adrian Kelly said the cut would boost confidence in the property market.

"Our March quarter showed the largest increase in volume of sales for some time, so a reduction in interest rates will reinforce that," Mr Kelly said.

Australian Industry Group chief executive Innes Willox said he expected business confidence to rise.

"Businesses will be looking for further falls in exchange rates to help lift competitiveness," Mr Willox said.

Master Builders Tasmania executive director Michael Kerschbaum said it was good news for people building or renovating and was hopeful of a boost to the subdued building approval figures of 2012-13.

"We think it could help bring about a pick-up across the broader property sector and lift construction in 2013-14," Mr Kerschbaum said.

Tasmanian Small Business Council executive officer Robert Mallett called on the banks to pass on the savings to credit card holders as well.

"There are a significant number of businesses which use credit cards instead of overdraft and they are paying 20.5 per cent," Mr Mallett said.

"It is important credit card interest rates are cut."

The rate cut was not good news for self-funded retirees.

"For those living on interest income, it will not be welcome," said Association of Independent Retirees national director Rob Cleary.

"In general terms people have recognised the downward trend and have taken any action they can."


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