RBA Record Rate Drop
Great deals for home loan borrowers
Following the recent RBA announcement of a rate drop of 0.25% earlier this month, banks have been dropping their home loans rates. Not all banks though passed on the full decrease. Drops ranged from 0.18% – 0.25%. Banks also passed on the rate drop at different dates with the first banks ANZ and NAB to pass them on by 14/6/19 with the final banks adjusting their rates on 25/6/19. So, all borrowers should now be able to see the lower rates.
A rate cut is a perfect prompt for borrowers to get in touch with your mortgage broker or lender and check they still have a competitive deal. With Australia’s cash rate now at a new record low and financiers offering promotions for new lending, there has never been a better time to strike a great home loan deal.
With the falling cash rate, borrowers can save almost $60 a month on the national average loan amount of $400,000, according to loan Market Group.
The record low-interest rate creates real opportunity for first home buyers, investors and refinancers, with house prices in Australia’s two major cities now at the same level they were in late 2015 to early 2016.
Consumers that have been looking to re-negotiate for a more competitive rate, with additional loan features from their existing lender now have that opportunity to put them on notice. Brokers have never been more important to everyday Aussies looking to enter the housing market, refinance or invest.
Warnings for home loan borrowers
We would however caution borrowers to keep their repayments at current levels to drive down debt. There is a temptation to spend the windfall including tax cuts and wage growth, but we don’t think that’s the best strategy.
Economic growth is flat, debt levels are high, the housing market is still patchy, and unemployment is static. When you add global factors into the mix there is cause for caution. Borrowers will effectively be saving for a rainy day if they keep their mortgage repayments as high as they can afford. It’s better to have payments in reserve to create a buffer against any life events.
Lower rates are a sign the economy is slowing and there’s little or no inflation. On face value, lower rates look good for borrowers, or could be a signal to borrow more.
But this is an opportunity to reduce debt, re-negotiate your existing rates and even look to take advantage of the current market and look to pick up a little bargain in way of an investment property.
Speak with, SMS or email me to see what options are open to you on 0418 903 954 or donna-lee@celsiusfinance.com.au
warm regards,
Credit Advisor
Celsius Finance