Official Cash Rate cut to 2.50%

The Official Cash Rate was cut by 50 basis points last Thursday to 2.50%.

To date the only Bank movement on home loan interest rates that we have seen is Westpac’s cut of 40 basis points to its 6 month fixed interest rate. This now stands at 5.39%.

The cut was accompanied by some strong wording from the Governor, including..”We expect to keep the OCR at or below the current level through until the later part of 2010″. This was done in part to try and jawbone the interest rate markets down following on from his displeasure at the extensive rises in long term fixed interest rates.

Late last week the 2 year swap rate was at 3.44%. The 5 year swap rate was at 4.65%, a reduction from the previous week.

We shall patiently wait for any movements to flow through to the home loan interest rate market.

Update 11 May 2009.

Anz and National, who are effectively one and the same, have reduced their 6 month fixed interest rate by 0.34% to 5.45%. Their 1 year fixed interest rate is down to 5.50%  In addition they have a cheeky wee number in the form of a 3 month fixed interest rate of 5.35%.

And that folks, looks to be our lot, from the last Official Cash Rate reduction. 👿

Something to consider for borrowers coming off fixed interest rates currently is to roll onto a 6 month fixed interest rate @ 5.50% but maintain your monthly repayments at the same level as what they were prior to the re fix.

This would mean your getting the lowest interest rate possible currently and that more of your monthly repayment is going towards the reduction of the amount of your loan that is outstanding. That is assuming of course that you are managing with your existing repayments.