Finally, the news we’ve been waiting for!
Yesterday, the RBA announced the first rate cut in four years. It was just 25 basis points, but it’s a start.
The great news is that the big 4 banks are passing on the full rate cut on variable home loans which will be a relief for many home owners.
For the average home loan of $600,000 at a rate of 6.5% on a 30 year term, the minimum repayment is $3793 per month. A rate reduction of 0.25% will reduce the minimum repayment by $98 per month.
It’s not life changing, but it’s a start.
It also presents a couple of opportunities:
- Speak to your bank, lender, broker – whoever helps you with your mortgage – and ask for options to refinance or reduce your rate.
- Review your finance needs. If you have other debts with high interest rates, like credit card debt or personal loans, or you’re planning on renovations, this would be a good time to revise your loan and consolidate debt at a lower interest rate.
- If you can manage to continue paying the higher repayments, do so! This extra $98 per month would have two years off the life of your loan and would save you over $61,000 in interest charged by your bank.
Now that is a big deal!
It will be interesting to see how the property market responds and whether buyers will remain cautious or if it will spur a flurry of activity.
#buythathouse
