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Banks cut fixed rates after the RBA leaves official interest rates on hold

The Reserve Bank of Australia (RBA) has been sensible in an unpredictable global economic environment to keep official interest rates on hold, says leading mortgage broking firm, Loan Market.

Loan Market Chief Operating Officer Dean Rushton said despite a variety of predictions over how the RBA would respond to its concerns about rising inflation, the central bank maintained the cash rate at 4.75 per cent for the ninth consecutive month.

Mr Rushton said the United States' debt crisis, continuing concerns about Europe and the multi-speed domestic economy meant it was not the right time for the RBA to be tightening monetary policy.

Following the rate hold, a number of major banks have cut their fixed home loan interest rates, with one bank reducing its fixed rate home loans by up to 60 basis points; one of the biggest decreases of the year.

Mr Rushton strongly urges consumers to seek advice if they are considering some of the cut price fixed rate home loan products now being offered.

'Obviously the broader issues of market instability are continuing to derail consumer confidence and we want to ensure that consumers make the right decision for the long term,' Mr Rushton said.

'Lenders wouldn't be rolling out price cuts without a strong feeling that a rate decrease by the RBA is now on the cards.

'We're now more certain than ever that there's a clear case for the RBA to bring rates down,' he said.

Mr Rushton believes borrowers need to ensure they are locking into a fixed rate for the right reason. This may include certainty of repayments and peace of mind, rather than speculating how rates are going to move.

Loan Market. 2 August 2011. http://loanmarket.com/?p=5240 RBA makes sensible move. Reproduced with permission.

Smart Property Investment. 10 August 2011. http://www.spionline.com.au/2011/08/lenders-cut-rates/ Banks move to cut rates. Reproduced with permission.