The yield curve inversion continues to deliver more savings for borrowers, but, unfortunately, lower returns for savers. This inversion is a function of financial markets thinking the RBA is going to have to cut rates, and the high esteem with which Aussie government bonds are held, driving up their price, and reducing, therefore, their implied interest rate (given the underlying bonds have a fixed coupon). From AAP:
"Commonwealth Bank (CBA) has cut interest rates on fixed rate home loans following the Reserve Bank of Australia's decision on Tuesday to hold the overnight cash rate at 4.75 per cent. CBA dropped interest rates applying to one-year home loans by 11 basis points to 6.48 per cent, and cut the interest rate on three-year mortgages by 16 basis points to 6.43 per cent. The new rates take effect from Wednesday. In this environment customers want certainty with their homeloan repayments, CBA's group executive of retail banking, Ross McEwan, said in a statement."
