The RBA recently dropped the cash rate to a record low of 1.25%. This is great news for homeowners and anyone with a mortgage. It is also positive for those looking to get into the property market. Cheap mortgage home loan rates are always welcomed.
Many of the banks lowered their variable rates by the full 0.25% and some did not quite go all thew way. Let’s be honest, the banks need some good PR so they should pass this onto customers. Well done to ING, Macquarie, Bankwest and many others for delivering what matters to your customers.
1. Are More Rate Cuts on The Way
Well, RBA governor Philip Lowe, said ““It is not unrealistic to expect a further reduction in the cash rate as the board seeks to wind back spare capacity in the economy and deliver inflation outcomes in line with the medium-term target.” We look at this as a long winded way of saying YES.
2. Should I Have Variable or Fixed
This is always a great question. On one hand, fixed loans are great from a family budget perspective. On the other, if you fix now and rates keep dropping, you may miss out. With lenders like ING offering as low as 3.38% variable (3.41% comparison rate) and may others with great deals, rates getting even lower would question if fixing makes sense
3. How Much Will I Save by Refinancing
The first thing to do is call your existing banks. Very simply, tell them that you are going to leave if they do not give you a better deal. They won’t give you the same as a new customer. They also will not be able to match the deals from other banks most likely. Who cares, if you get them to drop your rate a little when you start saving straight away. Then, you get to the real work. Home Loan Cash Back will scour the market for the best deals you may be eligible for. This way you maximise the savings whilst also getting lots of cash back. If you have a home loan for $500,000 and we save you only 0.50%, with the cash back and savings you save around $3,200 per year.
4. What Will Happen to House Prices
If you find that magic wand, please let us know. We can say say the property is worth what someone is willing to pay for it. The real question to ask is, how do people get the money to buy a property? Yes, you guessed it, from a bank. Interest rates being lower is one thing although bank’s credit policies are equally important. If the banks do not lend people money, no one can buy property so prices drop. This has been happening a lot lately.
Good news is that APRA, the bank regulator, is proposing to relax some of the criteria. This may not open the lending floodgates but should help. Easier access to credit and lower interest rates seem the perfect ingredients to start improving the price of your home.
