While the RBA left the cash rate at 0.25 per cent today, lenders are still slashing home loan rates for new customers, particularly owner occupiers who have equity in their home.
Today Australia’s largest lender, CBA, dropped its lowest variable rate down to 2.79 per cent, but only for new customers with at least 20 per cent equity in their property (see below for details).
Sally Tindall, research director at RateCity.com.au, said: “The best way to get a rate discount is to turn yourself into a new customer.”
“The banks are offering up some of the lowest rates we’ve ever seen. Switching lenders could potentially free up hundreds of dollars per month for people in a position to refinance,” she said.
“Australians who are struggling financially shouldn’t be afraid to ask for a rate cut either. Banks have made it clear they want to help people affected by COVID-19 where they can.
“If you do sign up to a fixed loan, do your research first and make sure you’re happy with your rate. Fixed loans are typically less flexible, but a lot of people are looking for certainty right now above everything else,” she said.
New figures from RateCity.com.au show the average mortgage holder with a $400,000 home loan could potentially save $289 per month by moving to the lowest fixed rate at 2.09 per cent. This assumes variable rates remain the same for existing customers.
Potential impact of moving from average variable owner occupier rate 3.50% to lowest fixed rate of 2.09%
|Loan size||New Monthly Repayment||Monthly Savings||Savings in first year|
Note: the above scenarios are for owner occupiers paying principal and interest, changing loans 5 years into a 30-year loan. Note the fixed rate terms are for 1 to 3 years, after which time it will switch to a variable rate if the person doesn't renegotiate their loan. Calculations exclude fees and assumes existing customer variable rates remain the same.
CBA’s Extra home loan rate changes, effective today (7th April)
|Loan to value ratio||Old rate||New rate||Difference|
Note: the above rates are for owner occupiers paying principal and interest on a variable rate.
Lowest big four bank variable rates
|Bank||Advertised rate||LVR requirement|
Note: rates are for owner occupiers paying principal and interest. Some LVR requirements apply.