Interest rate cut ‘more harmful than helpful’
THERE'S been a mixed reaction to the Reserve Bank's interest cut in Warwick, with one banking executive describing the move as "over zealous".
The Reserve Bank cut interest rates by 0.25% on Tuesday, down to a record low of 1.75%.
Warwick Credit Union CEO Lewis von Stieglitz believes the rate cut would hurt more people than it would help.
"If you're a self-funded retiree you're really struggling and for borrowers, interest rates are already so low it doesn't make any difference," he said.
"If you're already borrowing at that 4-5% bracket, an extra quarter of a percent isn't going to make any difference ."
While many of the major banks have followed the official interest rate cut, the Warwick Credit Union is yet to make a decision.
Mr von Stieglitz said the credit union would cut its rates, but the board was still working out how much the cut would be.
"When everyone else put their rates up quietly over the past few months, we didn't," he said.
"We have to work out the right sort of cut."
For those wanting to make most of the interest rate cut, Mr von Stieglitz said it was an ideal time to borrow.
"For somebody who is borrowing money for their first home, it's a good time to get into the housing market," he said.
"If you're already in the property market it's a fantastic time to pay off your loan faster."
While experts remain divided over whether another interest rate cut is on the horizon, Mr von Stieglitz said he hoped there wouldn't be.
"I hope if we're not at the bottom of the barrel, we're very close to it for the sake of all those who invest in us," he said.