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All I want for Christmas is a rate cut

In a move that should give variable rate mortgage holders financial relief and encourage property buyers to take action over the holidays, the Reserve Bank of Australia today decided to lower the cash rate by 0.25 percent, to 4.25% from 4.50%.

June 12, 2012

Mortgage Choice spokesperson Belinda Williamson said, "Today's decision by the Reserve Bank to reduce the cash rate is good news for buyers and borrowers, assuming lenders pass on the full rate cut. Consecutive rate drops are likely to give people greater confidence in their finances and ability to repay a home loan."

"Today's move may entice potential buyers, who have been adopting a 'wait and see' approach, to enter the property market. Our annual national Consumer Sentiment Survey uncovered that if rates fell in the next six months, 26% of respondents would be more likely to buy property.

"The rate decision may also give variable rate borrowers the opportunity to review their budget over summer, and provide the impetus to start making higher or more frequent repayments, reducing their loan term and the interest payable.

"For example, if a borrower has a $300,000 home loan and is repaying it at 7.5% interest, with monthly repayments of $2098, and the loan's rate drops to 7.25%, this puts around $50 back in their pocket.

"However, borrowers wanting to repay their loan sooner could maintain the same, pre-rate cut repayments, reducing their loan term by two years and five months and saving around $42,000 in interest owed.

"With savings in mind, now is the time for borrowers to keep a close eye on their lender to see if they pass on rate cut in full. Lenders are competing fiercely for borrowers' business - meaning at present there are some exciting deals in the home loan market.

"In the approach to the New Year, it is a good time for borrowers to 'health check' their home loan with a professional mortgage broker to determine if there is a more competitive loan product suited to their needs."

For home loan tips, trends, facts, data and other information, visit, or Or, call 13 MORTGAGE.

Belinda Williamson
Mortgage Choice Corporate Affairs
(02) 8907 0472 / 0407 416 124

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