RBA signals that more home loan rate cuts are coming

Nick Bendel

Nick Bendel

Jun 24, 2019( 3 min read )

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Banks have been cutting mortgage rates left, right and centre – and it seems more interest rate reductions might be just around the corner.

The Reserve Bank of Australia has hinted that it might again cut official interest rates, despite reducing the cash rate from 1.50 per cent to a record-low 1.25 per cent on June 4.

The minutes from that June 4 meeting recorded that board members felt “it was more likely than not that a further easing in monetary policy would be appropriate in the period ahead”.

Meanwhile, in a speech on June 20, RBA governor Philip Lowe said: “It is not unrealistic to expect a further reduction in the cash rate”.

If the RBA does reduce the cash rate by another 0.25 percentage points – perhaps at its next meeting, on July 2 – it is likely that many lenders will pass on at least some of the rate cut.

After this month’s rate cut, numerous lenders responded by lowering their home loan interest rates, including:

Meanwhile, Reduce Home Loans unveiled the lowest variable rate in Australia, at 3.09 per cent.

Has your bank cut its rates?

Click here for a full list of which lenders have cut, and by how much.

A double rate cut could save you tens of thousands of dollars

Wondering how a second rate cut might affect your bottom line?

Let’s work it out by assuming that the average interest rate was recently cut by 0.25 percentage points, and might be cut again by another 0.25 percentage points.

At the end of May, the average interest rate of all the variable, owner-occupied, principal-and-interest home loans on the RateCity database was 4.30 per cent. So the new average might theoretically fall to 3.80 per cent. Here’s what that might mean for a 30-year mortgage:

Loan amount Old rate New rate Monthly difference Total difference
$300,000 4.30% 3.80% -$87 -$31,227
$400,000 4.30% 3.80% -$116 -$41,636
$500,000 4.30% 3.80% -$145 -$52,045
$750,000 4.30% 3.80% -$217 -$78,068
$1,000,000 4.30% 3.80% -$289 -$104,091
Click here for a full list of which lenders have cut, and by how much.
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