RBA rate cut provides relief to businesses, homeowners and consumers. RECORD low interest rates are feeding soaring house prices and delivering a mid-year tonic for consumers and businesses. The Reserve Bank of Australia effectively wiped about $45 a month off the average $300,000 mortgage with yesterday's decision to drop the cash rate to modern day record low of 2.5 per cent. Has the rate cut spurred you into action? National Australia Bank and Commonwealth Bank moved quickly to announce they would pass on the 25 basis point rate cut in full from next week and Westpac went even further, saying it would slice 28 basis points from its standard variable rates. "The latest consumer surveys have shown that confidence is the key to our customers' well-being and we believe that what we have announced ... will help support growth in the housing sector as well as improve the faith in Australia's economic outlook," he said. The rate cut, along with a rapidly falling Australian dollar is expected to feed into the broader economy in the coming months, and provide a boost to struggling industries such as tourism and manufacturing. Reserve Bank cuts interest rates by 25 basis points The move came on the same day as new data showed Brisbane house prices increased more than 3 per cent in the past three months. Consumers are also expected to be coaxed into opening their wallets with subdued inflation likely to keep rates at these historical lows, not to mention the end of political uncertainty a matter of weeks away. Retailer groups say there is work to do but the RBA has "saved the furniture." "The RBA has provided some relief to Australian retailers, although it is concerning that this cut has come on the back of flat retail sales, predictions of rising unemployment and falling consumer and business confidence," Australian Retailers Association executive director Russell Zimmerman said. Further abroad and our international counterparts are continuing to recover. Europe and the UK are showing positive signs with upbeat manufacturing data this week. The US manufacturers are also continuing to strengthen. Banking giant HSBC said the coming months will show how well Australia is coping. "We expect low interest rates to continue to support the housing market and for this traction to begin to spread to the broader economy in coming months," it said. We expect the election may help this process, as it should reduce political uncertainty which may lift business and consumer confidence. We also expect the effect of the lower (Australian dollar) to feed through and provide support for the exchange rate sensitive industries, including tourism and manufacturing, but also lift inflation. Brian White of the Ray White real estate dynasty said the decision to cut rates now provides a solid base for an already strong property market. "This decision will enable Australia to go to the election on September 7 in an environment of a strong market - a situation that has traditionally been good for incumbent governments," Mr White said. In other news today Australia recorded a $602 million trade surplus - the highest result in 18 months - and evidence of the immense demand by China for local resources. Mining investment may have flattened, but the boost to the economy from Chinese purchases of our resources is ongoing," Commsec chief economist Craig James wrote yesterday.