The Reserve Bank of Australia (RBA) has left the cash rate on hold at 0.75 per cent at the last meeting of 2019.
After three rate cuts since June, the average Australian mortgage holder is now $127 per month better off, according to new research from RateCity. This is based on a big four customer with a discounted variable rate and a $400,000 loan with 25 years remaining.
If that borrower chose to invest this back into their mortgage, by leaving their repayments the same, they could be more than $24,000 ahead over the remainder of their loan, and pay it off 2 years and 3 months sooner.
Impact of three rate cuts in 2019 – average mortgage holder
|Estimated savings June to December||$595|
|RBA cumulative cuts since June||0.75%|
|Average cumulative cuts from big four banks||0.57%|
Notes: based on a variable owner-occupier home loan, paying principal and interest repayments, with a balance of $400,000 and 25 years remaining. Rates are an average of the big four discounted variable rates.
Sally Tindall, RateCity research director said, despite no rate cut today, variable mortgage holders have come out in front this year.
“Home owners are very much ahead this year – our research shows that the average Australian mortgage holder is now saving an estimated $127 a month thanks to the three RBA cuts this year, even though they weren’t passed on in full,” she said.
“While it’s tempting to spend your money at the shops, putting the money into your mortgage could help you pay it off months, even years earlier.
“Our research also shows while the average owner-occupier rate has dropped 0.57 per cent in the last year, the lowest rate has dropped by 0.75 per cent.
“If you’re willing to shop around there are rock bottom rates available,” she said.