Homeowners received a boost today when the Reserve Bank cut rates by 75 basis points to 5.25 per cent. This is the third straight cut this year.
The good news on interest rates is a sign the economy is faltering.
Immediately after the announcement, Commonwealth Bank announced it was cutting interest rates on its standard variable home loan rates by 0.58 per cent effective November 10.
If retail banks pass on the rate cut in full, homeowners with an average $300,000 mortgage will see a further reduction of $150 off their monthly repayment.
Another cut of 25 to 50 basis points is possible before Christmas, analysts say. The cuts are expected as the economy showed further signs of a dramatic slowdown.
The Australian Industry Group's Performance of Manufacturing fell to its lowest level since 1992 prompting widespread fears of a significant leap in the jobless rate.
Nationally, house prices have dropped by 2% in the past three months- their first fall in three years.
Reserve Bank governor Glenn Stevens said world financial markets had remained "turbulent" over the past month. He also stated that there had been significant exchange rate movements, including a sharp depreciation of the Australian dollar.