Wizard surprises banks with early rate cut, but home buyers keep wallets shut

Wizard Home Loans has surprised its customers and made history by becoming the first Australian bank in seven years to cut its variable interest rate, dropping from 9.54% to 9.29%, effective from today.

Wizard Home Loans has surprised its customers and made history by becoming the first Australian bank in seven years to cut its variable interest rate, dropping from 9.54% to 9.29%, effective from today.

The decision comes as the Reserve Bank prepares to meet tomorrow, with speculation it will cut the national rate by 25 basis points to 7%; ending a string of 12 consecutive rate rises after over years.

Federal Treasurer Wayne Swan has urged banks to follow Wizard’s example, saying: ‘‘Over time the banks will be coming down, or should be coming down, over and above any cut in the Reserve rate.”

Real estate agents are hoping the rate cut will spark interest among property buyers, as auction clearance rates are disappointing this week. Sydney dropped from 54% last week to 51%. Adelaide slipped from 45% to 33%, while Melbourne dropped from 63% to 54%.

The only city to make an improvement was Brisbane, continuing a second week of massive growth from 35% to 43%.

Read more on auction clearance rates