The average variable home loan rate is set to drop to 4.40 per cent this month, following today’s decision by the Reserve Bank to cut official rates to a new record low of 1.75 per cent.
At that rate, repaying the average, $300,000, 30-year home loan costs less than $50 per day.
Sally Tindall, money editor at RateCity.com.au, said home loans just got a lot more affordable for some.
“At less than $50 a day, the great Australian dream of homeownership will now be a lot closer to reality for some,” she said.
“For anyone who’s already got a variable mortgage, today’s rate cut could save you around $45 a month – or over $500 a year – on the typical $300,000 home loan.
“That’s a handy chunk of savings you can put into your weekly budget or, better yet, put back into your home loan.”
But with increased global volatility putting the squeeze on banks’ wholesale funding costs, there’s every chance lenders will opt to keep some of the cut for themselves, according to Tindall.
“We know a lot of lenders are under wholesale funding cost pressures so they might decide to keep some of the rate cut for themselves,” she said.
“Call your bank, find out what they intend to do, but also see what others are offering, because ultimately the lower the comparison rate, the more money you’ll have left in your pocket.
“There are plenty of lenders already offering rates below 4 per cent for owner-occupiers, so if you’re on a rate above 4.50 per cent, the chances are you’ll still be behind, even if you do get a cut.”
Before today’s cut is factored in RateCity.com.au shows variable rates from 3.54 per cent, and 1 year fixed rates from 3.50 per cent.
For a table of who has moved, click here.