Variable rates to push below 3.5% in Aug – 1st time on record
Extract from RH Fusion Media Release: August 2016
Variable home loan rates are set to dip below 3.5%– the lowest on record – following the Reserve Bank’s decision to cut the cash rate to 1.5%, according to comparison website RateCity.
At this rate, repaying the average, $300,000, 30-year home loan will cost less than $50 per day. Peter Arnold, data insights director at RateCity.com.au, said the August rate cut means we’re now likely to see variable mortgage rates hit new lows of under 3.5%, with rates of 4% becoming the new norm. “On average, [the] cut will put an extra $45 a month back into the pockets of anyone with a variable home loan, or more than double that for those living in the cities of Sydney or Melbourne,” he said. “Most people will have no shortage of ways to spend this extra cash, but if you want to maximise your savings, one of the best places to put it is back into the mortgage,” he said.
The RBA’s decision to implement another rate cut in the space of three months means there’s every chance some lenders will opt not to pass on the cut. “Not all lenders passed on the full 0.25 percentage point saving after the May rate cut, with just 0.18 percentage points making its way to customers on average, leaving borrowers $183 million out of pocket,” said Peter. “Call your bank and find out what they intend to do, because if you live in the home you own, and you’re still paying over 4.5% after this cut, then you should seriously consider whether you’re getting value for money.”
For the RH Fusion's media release, click here.