After weeks of speculation, the Reserve Bank of Australia board has followed through with a 0.25 percentage point rate cut today, bringing the cash rate to a new record low of 2.25 percent.
RateCity’s financial commentator, Peter Arnold, said the rate cut represents $47 per month back in the pocket of variable borrowers with a typical home loan of $300,000, if lenders choose to pass it on in full to customers.
“For many borrowers, particularly those in the capital cities of Sydney and Melbourne, the rate reprieve will be more than $100 per month,” he said.
“We expect there will be some lenders who get out there and cut rates straight away and try to grab some market share on the back of today’s announcement, which is great news for variable borrowers. But I’d urge Aussies to not be wooed by offers for a big ‘discount’ and to keep an eye on what really counts – the actual rate.
“We’ve seen a lot of action over the last year in the home loan space as lenders have been fighting hard for new business. The gap between average rates and the lowest on the market is 0.80 percentage points – that’s more than three RBA rate cuts and could trim $150 per month on that same loan saving you $47 today,” he said.
Even before today’s rate cut is applied, RateCity shows advertised variable rates from 4.52 percent and fixed rates from 4.48 percent.