By Mark Kenny November 04, 2008 12:37am
HOMEOWNERS are in for a boost today when the Reserve Bank is tipped to slash official interest rates. And lower rates are not the only good news.
Petrol is also expected drop by as much as 10c a litre in coming weeks.
But the good news on interest rates is a sign the economy is faltering.
Markets have factored in a likely cut of 50 basis points - or half a percentage point - a third straight cut this year.
However, with international bank-to-bank lending costs still fluctuating, there is no certainty banks will pass on the full benefits immediately.
If passed on in full, a half percentage point cut would take around $80 off the monthly mortgage repayments of the average home loan of $250,000 over 25 years.
And it would mean homebuyers will have saved in the order of $300 a month since the central bank began its current rate cutting phase.
Another cut of 25 to 50 basis points is possible before Christmas, analysts say. The cuts are expected as the economy showed further signs of a dramatic slowdown yesterday as the global financial crisis continues to bite.
The ANZ's job advertisement survey has suffered a massive 34 per cent slump over this time last year.
The Australian Industry Group's Performance of Manufacturing fell to its lowest level since 1992 prompting widespread fears of a significant leap in the jobless rate.
The Federal Government said it was hoped the banks would pass on the full amount of any interest rate cut.
"We would expect the commercial banks to pass through any official cut in interest rates as rapidly as possible," Prime Minister, Kevin Rudd said.
Treasurer, Wayne Swan was similarly firm. Nationally, house prices dropped by 2 per cent in the past three months - their first fall in three years.
However, South Australia bucked the trend, leading the nation with a strong annual growth of 9.7 per cent.
Mr Swan said the Government was determined to manage the economy in such a way as to promote growth.
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