Variable home loan rates are set to dip below 4 percent this month – the lowest on record – following today’s decision by the Reserve Bank to cut the cash rate to 2 percent.
Peter Arnold, banking analyst at RateCity.com.au, said typical borrowers will be saving around $1200 this year on their home loan repayments compared to what they paid the previous year. For a lot of people in the capital cities it will be around double that.
“It’s not just the RBA who’s been cutting rates; the lenders have been getting in on the action as well. We’ve seen them trimming variable rates for quite a while now and at the last RBA cut in February many lenders moved above and beyond the RBA’s 0.25 percentage point cut, which we expect to see again this month,” he said.
“In this increasingly-low interest rate environment people are really starting to sit up and take note of low rates. At the February rate cut we saw 60 percent more people looking for home loans and we’re expecting that to really spike again after this latest cut,” he said.
The RateCity database shows that, until recently, the most competitive variable rates were sitting as low as 4.19 percent and if today’s 0.25 percentage point cut is passed on in full by lenders, the pointy end of the market will dip to 3.94 percent.
To keep an eye on which lenders are moving rates, and by how much, keep an eye on RateCity’s Rate Tracker.