The Reserve Bank of Australia (RBA) just cuts its interest rate by another 0.25% to 0.75%, marking the third cut in the last few months.
Retiree Australians relying on income from Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) term deposits won't be happy about today's RBA decision.
I can't imagine that younger Australians saving up to buy their first property will be thrilled either, as it will reduce the amount of interest earned in the savings account and could further boost house prices.
The Australian property market is seeing the green shoots of recovery in Sydney and Melbourne according to Corelogic, although Perth is still showing a sizeable decline each month.
Property owners around the country can rejoice because the RBA rate cut will likely see the big banks like National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group (ASX: ANZ) cut their loan rates again.
Although economists aren't expecting the banks to pass on the full rate cut, they are expected to cut at least 0.15% off their mortgage rate, which could save an Australian household hundreds or perhaps thousands of dollars in interest each year.
With rates so low there's plenty of competition for good borrowers, so you do have leverage and you can 'shop' around for the best deal, or at least get your bank to lower the rate as much as possible.
Foolish takeaway
If I had a mortgage I'd be quite happy with the current situation. Obviously interest rate reductions are generally not good news, it suggests that something is going wrong in the local or global economy. But, if you own a home, it likely means that you're better off than you were before.
