The Reserve Bank has left the cash rate on hold today at 0.25 per cent but has left the door open to a future cut.
While home-owners won’t be getting an RBA cut from their bank this month, they can still save thousands by refinancing.
New figures released by the RBA today show the average existing mortgage holder had a home loan rate of 3.19 per cent in August, yet new owner-occupier customers were offered, on average, a rate of just 2.69 per cent.
Average RBA home loans rates compared to lowest rate loans
|Average rate - existing customers||Average rate - new customers||Lowest variable – new customers|
|Owner-occupied; All loans|
|Investment; All loans|
Source: RateCity.com.au.Average RBA rates are from Housing Lending data 31.08.2020, released 6.10.2020. Lowest rates are from RateCity.com.au database. LVR restrictions apply for some rates.
- Lowest variable rate is 1.89%
- Lowest big four bank variable rate is 2.19% (Westpac, intro rate for 2 years, reverts to 2.69%)
- 87 lenders have at least one fixed or variable rate below 2.50%
- 12 lenders have at least one fixed or variable rate below 2%
RateCity.com.au analysis shows the average owner-occupier would pay $33 less a month with a 0.15 per cent rate cut, but if they refinanced to the RBA average new customer rate their monthly repayments could drop three times as much.
|Existing customer rate||3.19%||$1,728|
|Potential rate if RBA cut by 0.15%||3.04%||$1,695|
|New customer rate||2.69%||$1,620|
Notes: Based on a $400,000 loan over 30 years paying principal and interest. Note refinancers may have shorter loan terms.
RateCity.com.au research director, Sally Tindall, said mortgage holders don’t need to wait around for the RBA to save money.
“While home-owners didn’t get any reprieve from the RBA this month, they can still make significant savings by shopping around.
“If you’re fortunate enough to still have your regular income and a decent amount of equity in your home, you’re in prime position to capitalise on the refinancing boom.
“According to RBA data, the average existing home loan customer is on a rate that’s half a percent higher than a new customer.
“For households currently facing financial hardship due to COVID, don’t be afraid to call your bank and ask for a better deal. The banks have been instructed by ASIC to do everything they can to help struggling customers.
“Find out what rate your bank is offering new customers and use this to help you haggle.
“If the RBA cuts rates by 0.15 per cent in the coming months, the spotlight will be on the banks to see if they pass it on in full to their loyal customers,” she said.
Lowest owner-occupier rates on RateCity.com.au
|Variable||Reduce Home Loans|
|1-year fixed||Reduce Home Loans|
|2-year fixed||Community First Credit Union/ Illawarra Credit Union|
|3-year fixed||Bank First|
|5-year fixed||Virgin Money|
Source: RateCity.com.au. Home loans above are available Australia-wide. LVR restriction may apply.
Big Four Bank lowest rates
2.19% for 2 years then 2.69%
Source: RateCity.com.au.Note: Rates are for owner occupiers paying principal and interest. Westpac’s rates are for customers with a loan-to-value ratio of less than 70 per cent