It’s unlikely your bank will pass it on so what should you do?
For the second time in 3 months, the Reserve Bank of Australia (RBA) has once again dropped the official cash rate, this time by 25 basis points to a new record low of 1.5%.
Some of the banks have already passed on part of the rate cut! Check out the variable interest rates that we currently have on offer:
| Loan Category | Interest Rate | Comparison Rate* | Contact Us |
|---|---|---|---|
| $250,000 or above | 6.10% | 6.70% | Apply Now |
| $500,000 or above | 6.10% | 6.70% | Apply Now |
| $1,000,000 or above | 6.05% | 6.65% | Apply Now |
Warning: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Each comparison rate is calculated based on $150,000 over 25 years for a secured loan.
Banks rarely pass on the rate cut in full…
It’s a slap in the face but unfortunately it’s true!
Why?
The banks have been in an intense price war with each other for the past year which has seen their profit margins take a hammering.
They’re looking for a way to get some of this margin back so their new business model is to offer great interest rates to new customers and slowly put up the rates for their old customers in order to generate a healthy profit.
Every bank will make up their own mind, and we could be wrong, but we’re expecting them to pass on around 0.15% of the rate cut.
The 2 year rule
If you haven’t refinanced or renegotiated your home loan in the last two years then you’re almost certainly paying too much!
In the past, most people only needed to refinance every 4 years to keep a competitive loan but, oh, how things have changed.
Not many Australians know this but there are a lot of negotiated interest rates that just aren’t advertised.
If you’d like to know more, just call us on 1300 889 743 or enquire online.
3 year fixed rates have already dropped
The money markets reacted preemptively last week to news of a possible rate cut and a number of banks have already dropped their 3 year fixed rates.
It will be a little while before variable rates do the same but you can already lock in a low fixed rate of 5.44% (Comparison rate 6.04%).*
Not sure whether you should lock in your interest rate?
Have a read of the ‘Should I Fix My Home Loan?’ page for golden rules.
Are you in a position to refinance?
As a general rule:
- To get the most benefit and avoid Lenders Mortgage Insurance (LMI), you should only refinance if you have less than 80% of the property value owing on your mortgage.
- Banks generally require that you have made your mortgage repayments on time for the past 6 months.
- You need to have stable employment.
Can you negotiate with your bank?
If you’re on a variable rate and have a decent amount of equity in your property (paid off at least 20% of the value of your property), one of our expert mortgage brokers can negotiate with your lender and ask for a better deal.
If you’re an existing Home Loan Experts customer, our post-settlement team will do this automatically on the anniversary of the settlement of your loan.
Can rates go any lower?
The big question everyone wants to know is whether you should fix now or wait for rates to drop further.
The short answer is no one knows if the RBA rate will drop below what it is now. We can’t predict the future and even senior economists get it wrong…a lot.
Which banks have dropped already dropped their standard variable rate?
- ANZ: 0.12% reduction
- CBA: 0.13% reduction
- St George: 0.14% reduction
- Westpac: 0.14% reduction, except interest only loans which had a 0.10% reduction.
- NAB: 0.10% reduction
We can’t tell you whether you should fix your home loan or not but what we can do is properly assess your situation and let you know if you’re in a position to refinance.
The official cash rate is at a new historic low which is why we’re seeing many homeowners choosing to lock in for longer terms.
Our goal with refinancing is to put you in a better financial position, whether it’s by negotiating special interest rate pricing with your current bank or shopping you around to other lenders.
Call us on 1300 889 743 or complete our free assessment form to find out if you can refinance your mortgage and take advantage of this latest RBA rate cut.
*Warning: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Each comparison rate is calculated based on $150,000 over 25 years for a secured loan.