The Reserve Bank of Australia cut interest rates by 0.5% today.
The 50 basis point fall comes on the back of evidence the economy is struggling with weaker-than-expected inflation figures released late last month.
The official interest rate is now 3.75 per cent.
It is good news for mortgage holders who were earlier this year hit with out-of-cycle rises by many lenders.
“This is quite a heavy cut and the Reserve will be hoping that it has maximum impact,” says Domain property expert Carolyn Boyd.
Each 0.50 per cent drop in interest rates slices about $120 off the monthly interest cost of an average Australian mortgage.