THE Reserve Bank of Australia has reduced the cash rate by 0.25% to 3% today giving mortgagees an early Christmas present.

Most economists tipped there would be a reduction before the Reserve Bank's decision at 2.30pm today.

The decision means that a person with an average mortgage of $300,000 for 25 years would save about $40 a month.

Today's decision was the fourth cut for the year.

Harcourts Murwillumbah principal Peter Reading said the cuts over the year have helped with the housing market in the Tweed.

"The last couple of weeks there was an increase in interest," Mr Reading said.

"(On the impact of the latest drop) that will depend on whether the banks will pass it on.

"I hope this isn't a quick sprint and then it will fade off. I hope there is some strength behind it this time"

According to Governor Glenn Stevens, the bank decision to lower the base rate comes in the face of weakening global growth.

"Private consumption spending is expected to grow, but a return to the very strong growth of some years ago is unlikely," Mr Stevens said.

"Available information suggests that the near-term outlook for non-residential building investment, and investment generally outside the resources sector, remains relatively subdued."

The next Reserve Bank of Australia board meeting is planned for February 5.