Draghi's QE stance impacts Australia mortgages

[SYDNEY] European Central Bank president Mario Draghi's shift towards quantitative easing is reverberating 17,000 kilometres away in lower Australian mortgage rates.

Mr Draghi's Aug 22 comment that he will "use all the available instruments" to stabilise prices added to an already benign interest-rate environment that sent relative yields on Australian financial debt to seven-year lows. That's helping banks trim mortgage rates, providing the Reserve Bank of Australia (RBA) with a de facto easing even as investors bet it will keep policy unchanged on Tuesday for a 13th month.

Lower home-loan rates are putting more cash in consumers' pockets, aiding RBA governor Glenn Stevens's efforts to rebalance growth towards domestic demand as mining investment wanes. The spread between financial debt and government notes touched 102 basis points in July, the narrowest since October …