Since the Reserve Bank of Australia dropped the official cash rate earlier this month, banks have responded in an interesting manner.
It is starting to become relatively understood that lenders these days don’t directly borrow much of their resources from the Reserve Bank, so it would be erroneous - farcical, in fact - to expect lenders to simply do whatever the Reserve Bank does. However, they often tend to use an RBA change as an opportunity to realign their own rates with the market as things change.
This month the RBA dropped its rate by 0.25% down to the lowest in the history of the country once again. Generally speaking, banks are dropping their rates by 0.1% to 0.14% in response. This means that if your home loan interest rate doesn't start with a 3 you could be paying too much! Call the Team at Mortgage Choice in Kingsley on 9309 4780 to arrange a free Home Loan Health Check and to discuss your personal situation further. .
It is important to keep in mind that the cash rate doesn’t just affect money you borrow. It also affects the amount of interest that is paid on money you invest. With a growing proportion of retirees having funds invested in facilities such as term deposits, there is talk that lenders are only dropping lending rates by a small amount in order to maintain good investment returns for their term deposit clients.
At Mortgage Choice in Kingsley, we aren’t economists, nor do we pretend to have a crystal ball, but this is anecdotally what we are hearing in speaking to our lending partners.
Either way, home loan interest rates are still at an all time low, which is a great thing for home owners! If your home loan rate doesn’t start with a 3, we should talk. Perhaps we can get you a better deal and save you thousands! Give us a call on 9309 4780 today.