Australian banks are not expected to pass on the full interest rate cuts that are expected by many economists tomorrow, 7th April 2009. Banks are still claiming that funding costs are still very high.

Economists are mixed with what they are forecasting with some favouring a 50 basis pint cut, while others a 25 basis point, while the majority are expecting rate to be kept on hold at 3.35%, a 45 year low for Australian interest rates.  It is the first time in the many years that AAP has been compiling the monthly rates survey that forecasts for a central bank policy decision have been so close.

If a 25 basis point cut was to occur, this would leave the cash rate at three per cent, it lowest since March 1960 when the average rate was 2.99%.

A 50 basis point cut would put it under the all-time low of 2.89% in January 1960.

The RBA has cut interest rates by 400 basis points over five meetings between September 2008 and February 2009 with the banks  passing on 360 of those basis points to consumers in rate cuts.

Home buyers and propety investors are now saving thousands of dollars a year on their home loans due to the rapid reduction in interest rates over the last 8 months.

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