Interest rate drops to record low of 0.1% Nov 11, 2020
The Reserve Bank of Australia announced on Tuesday, 3 November, that the interest rate is being cut to a new record low of 0.1%.
The RBA also confirmed they do not expect to increase the interest rate again for at least three years.
In a statement, RBA Governor Philip Lowe said that the RBA is expecting unemployment rates to remain high in the coming years.
“The Board views addressing the high rate of unemployment as an important national priority,” Dr Lowe said.
“Today’s policy package, together with the earlier measures announced by the RBA, will help in this effort.”
With interest rates now at record lows, Intrust360° financial adviser Craig Chalmers says that now could be a good time to review your mortgage payments.
“Check if your mortgage provider has passed on the rate cut. If they haven’t, it may be a good time to review your loan and consider your options, such as fixing your mortgage,” Craig says.
“Generally, if your repayments have been reduced, and you can afford to continue making repayments at your previous rate, that can be a great way to pay off your home loan quicker.
“Anything you can do to reduce the amount of interest you pay on your loan is going to put you in a better financial position.”
The reduced interest rate forms part of the RBA’s new package of measures to support job creation and the recovery of the Australian economy.
Other measures in this package include the purchase of $100 billion of Australian Government bonds over the next six months to increase inflation and lowering the three-year bond rate target to 0.1%.
Dr Lowe said the RBA was not yet out of firepower to combat the recession, as the bank has additional monetary policy options they are prepared to use if needed. Nonetheless, he said the interest rate was unlikely to be cut further.
“In terms of interest rates, I think we have gone as far as it makes sense to do so in the current environment,” he said.
If you’d like to receive some advice about paying off your home loan, get in touch with the financial advisers at Intrust360°. You can call them on 1300 001 360, or book an appointment online.
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