More relief for home owners

The Reserve Bank has dropped the official cash rate by another 1 percentage point, down to 3.25% per annum.

The total drop is now 4 percentage points since the RBA stopped fighting inflation in September 2008 and switched its focus to improving market confidence and the supply of credit.

The latest cut will save borrowers around $200 a month in repayments on the average mortgage.

While 3.25% is low in contrast with a cash rate of 7.25 per cent in September last year, there is still considerable scope for the RBA to drop rates further if required.

The US cash rate currently sits at a range of 0 to 0.25%; the UK cash rate was cut to 1.5% in January 2009.