The Reserve Bank has cut the official cash rate by 25 basis points to an all-time low of 2 per cent.
But what does this decision mean for you?
1. More competition at auctions
Experts say the cut will no doubt fuel consumer confidence and spark more activity in the property market. Buyers, expect tougher competition at auctions.
The city’s clearance rates are tracking at five-year highs, and with a rate cut, get set for this to continue.
“Melbourne is not yet in a boom, but it is a very, very strong market, with clearance rates in the high-70s,” Greville Pabst, valuer and buyer’s advocate at the WBP Property Group, said.
“[This cut] is only going to put more fuel on the fire.”
2. House-price growth to hit double digits. Yes, double digits.
As competition increases and if clearance rates remain at lofty heights it will translate into higher-prices growth.
Mr Pabst said the interest rate cut will ensure double-digit house price growth in Melbourne this year.
“When you have clearance rates up around the 77 per cent to 78 per cent mark…you’re getting seven or eight bidders at auctions, and that has a tendency of driving price growth,” he said.
3. Pity the first-home buyers
Assuming the banks pass on the savings, money will be cheaper and first-home buyers will be helped to get a foothold on the property ladder, but on the flipside, those that are saving for the deposit, will need to save harder and for longer.
4. Cheaper loans
Well, there’ll be more cash in your pocket, due to money being cheaper and buyers locking in finance at a lower rate.
If you’re one of the lucky ones, that may just fund your weekly coffee addiction, but those with a larger mortgage will probably feel slightly more smug.
5. Bad news for home owners on fixed rates
Those clever cookies that locked themselves into a three or five-year fixed rate home loan, may be feeling just a tinge of regret right about now.
7. Courtney Barnett’s Depreston will become even more relevant
The Melbourne based singer-songwriter’s tune about struggling to buy a house within close proximity to the city may become an anthem for many, as people are pushed further out by the highly competitive market.
8. Spoiled for choice
There should be something for everybody. The cut may prompt those who are sitting on the fence about selling to take advantage of the market conditions.