Rate cuts will benefit home loan customers, says RBA

Leaders at the Reserve Bank of Australia (RBA) have insisted that recent interest rate cuts will help home loan customers.

Governor Glenn Stevens said the reductions will give mortgage holders a degree of breathing space, but he insisted that rate adjustments were not aimed at fixing declining house prices.

The average value of a home in Australia has fallen in the past 12 months and this has forced a lot of people into negative equity.

RBA chiefs slashed the national cash rate by 25 points earlier this week, which followed on from a 50-point cut in May.

The central bank also made consecutive 25-point reductions in November and December last year.

Mr Stevens said the intention of the cuts was not to pump up speculative demand for assets. He added that having more favourable rates would enable people to pay down their home loans far more quickly, thus dragging more people out of debt.

"The reduction in interest rates over the past eight months or so will speed up, at the margin, the process of deleveraging for those who need or want to undertake it."

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