Banks slash home loan interest rates despite RBA hold: ‘Taken for a ride’
Around 70 lenders have cut at least one variable home loan rate in the past 12 months, despite the RBA cash rate remaining on hold at 4.35 per cent.
The
Reserve Bank of Australia (RBA) has
kept the cash rate steady for a year but that doesn’t mean Aussie banks aren’t moving. A flurry of lenders have been slashing their variable home loan rates as the market heats up and
interest rate cut expectations near.
Around 70 lenders have cut at least one of their variable home loan rates in the past 12 months, RateCity research found, including major banks
Commonwealth Bank (CBA) and NAB. Last month alone, 17 lenders made cuts to at least one variable rate.
But not all customers will have had a rate cut, with many lenders reserving their lowest rates for new customers only. There are 34 banks that have at least one variable home loan under 6 per cent, while one of the lowest ongoing rates is 5.75 per cent.
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RateCity money editor Laine Gordon said it was a timely reminder for borrowers to check their home loan rate and compare it to what their bank was offering new customers.
“If you are being taken for a ride, then now is the time to do something about it,” Gordon said.
“By all means haggle, but consider making the switch. The sharpest rates are typically reserved for new customers, no matter how good your negotiating skills are, so it’s worth considering refinancing."
RateCity found an owner-occupier with a $500,000 loan and a 7.11 per cent rate could potentially save $12,315 over the next two years by refinancing to one of the lowest variable rates on the market of 5.75 per cent, even after factoring in switching costs.
Gordon recommended borrowers check how much equity they had as this would be important to understanding your refinancing options.
“If you’re an owner-occupier and own at least 20 per cent of your home already, then you’re in the box seat when it comes to rates. Use it to your advantage,” she said.
Some 982,900 mortgages have been refinanced since May 2022, Canstar analysis of ABS lending data found.
Considering the Big Four banks hold more than five million mortgages between them, that means many borrowers are missing out on savings
Several banks have also been cutting their fixed rates, including
ANZ who cut rates by 0.25 per cent for customers with deposits of 20 per cent or more last week.
CBA,
NAB and
Westpac have also made a string of fixed rate cuts over the past few months.
The RBA has kept the cash rate steady for a year but that doesn’t mean Aussie banks aren’t moving.
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There seems to be a fair bit of a difference of opinion between the RBA and the Banks.
At least mortgage holders may get some relief from the banks. How long it lasts is anyone’s guess. The cost of living (CPI, LCI and WPI) have fluctuated, but most are doing it fairly tough at the moment.
Hopefully for a lot of people, young families in particular interest rates continue to come down. Even if it allows people a brief respite.