Official interest rates are now at 5.25 per cent. The bank had been expected to cut rates by 0.5 per cent.

The cut is fantastic news for Maitlanders with mortgages ,according to local financial advisors and counselling services.

“I wouldn’t have thought they’d drop it by that much,” Club Financial Services managing director Janine Harris told the Mercury.

“Now we just have to wait and see what the actual banks pass. You’d hope they’d be passing on the whole 0.75.”

Ms Harris expects the rate cut to help reinvigorate the housing market around the city.

“For first home buyers, this is a fantastic boost,” she said.

Maria Hatch from Hunter Valley Project Financial Counselling said the cut would help relieve stress on Maitland mortgagees.

“The cut is great news because it frees up more money for food, petrol and other household expenses,” Ms Hatch said.

“It couldn’t have come at a better time. If people can they should put the (mortgage) savings towards a rainy day.”

The decision to cut rates by 0.75 per cent has been lauded by the Hunter Business Chamber.

“With the economy slowing and the cost of doing business on the rise, the cut to official interest rates is a much-needed relief,” chamber chief executive officer Peter Shinnick said in a statement.

The Housing Industry Association’s Hunter region executive director Steve Jefferies said the cuts would help entice buyers back into the home ownership market.

RBA governor Glenn Stevens said recent reductions in borrowing rates, the depreciation of the exchange rate and the fiscal stimulus announced in October will work to assist growth in the period ahead.

“But deteriorating international conditions and falling commodity prices will have a dampening influence,” Mr Stevens said in a statement.

“On balance, it appears likely that spending and activity will be weaker than earlier expected.”

It was reasonable to expect that inflation would soon start to fall, he said.

The rate cut has also been welcomed by Treasurer Wayne Swan and Opposition leader Malcolm Turnbull.