Australia’s leading financial comparison website RateCity (www.ratecity.com.au) has welcomed the Reserve Bank’s decision to lower the official cash rate at its August board meeting today. But borrowers are being urged to shop around to find far bigger rate cuts than those expected to be passed on after today’s announcement.
The official cash rate has hit a new record low of 2.50 percent after the second rate cut of the 2013 calendar year.
If passed on in full, a 0.25 percentage point rate cut represents a repayment reprieve of $44 per month to a variable rate home loan customer with a typical mortgage of $300,000 and paying the average interest rate of 5.64 percent (before any rate cuts are applied).
Alex Parsons, CEO of RateCity, said there were much bigger savings to be had by comparing home loans and refinancing into a better deal.
“While we would expect lenders to pass this cut on in full, we know this has not always historically been the case. The main thing for borrowers to remember is that they really don’t need to wait for an RBA rate cut. Far bigger cuts are available by comparing and switching to a better deal.”
“There’s a lot of lazy money out there. Refinancing from the average rate into one of the lowest variable rates on the market would mean savings of over $150 every month, or over $200 per month if today’s cut is passed on to customers,” he said.