Following backlash towards the way in which banks have been passing on only part of the latest RBA cash rate cuts, Auswide Bank has developed a loan that promises to pass on any changes in full. Of course, this does mean that borrowers have to take the good with the bad as any increases to the cash rate will also be passed on.
The fixed margin on the RBA Rate Tracker Loan is 2.49 per cent which is applied to the cash rate to determine the rate you will pay. If the cash rate falls to 0 per cent or below, the loan will be charged interest at the margin rate.
Other features on the loan include the ability to make extra repayments and a free redraw facility that allows you access to your built up equity at any time. Repayments can also be scheduled to suit your pay cycle at either a weekly, fortnightly or monthly frequency.
The Auswide Bank Rate Tracker Loan is good for customers who prefer a variable rate but are fed up with the unpredictable way in which banks decide to pass on cash rate changes. The loan also has features suitable for a first home buyer as it requires only a 5 per cent deposit and permits guarantors to back the loan.
Borrowers who want to be able to make unlimited extra repayments to their loan and redraw finds at a later day with no charge will also find this loan suitable. This may be particularly relevant for borrowers who think they may wish to renovate their property in the future by using the equity in their home loan.
The Auswide Bank Rate Tracker Loan is a unique type of mortgage that may appeal to certain borrowers who are fed up with the major banks’ approach to passing on cash rate cuts. It is not, however, the lowest variable rate on the market and it does not offer access to an offset account which many variable borrowers find useful to reduce interest costs over the life of the loan. Essentially, while it has its benefits, it is no currently the cheapest loan of it’s kind available on the market.
That being said, it does offer a fresh approach to the variable mortgage that shows a good level of commitment to customer satisfaction. It should be noted that customers who prefer face to face contact with their bank will not be able to achieve this unless they live in Queensland. Instead, they will need to be reliant on phone communication and internet banking facilities.