BREAKING NEWS: Double treat: Homeowners get rate cut, cash handout

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After a stint of inaction last month, the Reserve Bank swung back into gear today and lowered interest rates by 25 basis points to reach 3%.

But while the move is likely to make existing mortgage holders happy about their lower payments, it may have limited results in stimulating more demand in the housing market, said an expert.

"If the intention was to stimulate the market, the previous cuts have definitely already done that and, from that point of view, you wouldn't say there's a necessity to cut rates any further," said Mark Hewitt, general manager of sales and operations for mortgage broker AFG.

A greater impact than today's rate cut could come instead from Prime Minister Kevin Rudd's $42bn stimulus package giving nearly nine million Australian families and workers cash bonuses of up to $900 each from today.

"That's better than any savings anyone would get from a rate cut," said Matthew Gross, managing director of national property research.

The markets were split leading up to the decision this afternoon, as investors were less sure about this interest rate decision than in past months.

"At this point, there's a great deal of uncertainty about what is actually happening," said Gross on the overall economic picture.

One concern is that some of the biggest national banks have indicated they may not pass on the full cut made today, due to concerns of their own about foreign lending costs.

"In that sense, today's action might be a moot point," said Hewitt.

Today's 25-basis-point cut, if passed along in full by the banks, will knock about $54 off the monthly repayment on a $350,000 loan over 25 years.

He added that there are other factors that would have an impact on demand as well - apart from rate cuts - such as lower oil prices and an unemployment rate that is still quite low.

"There's a lot of good things happening in the economy," said Gross.

Hewitt said he didn't expect a huge change in property demand. Previous cuts have already resulted in an increased number of first homebuyers entering the market in recent months and even an increase in median home prices in some capital cities.

While the Reserve Bank may have nearly reached the bottom of where it can go with interest rates, Hewitt said he doesn't expect to see any upward movement in the rate this year.

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