December update: RBA cuts the cash rate to 3%
The last time the cash rate was at 3 percent was in September 2009.
Lenders are expected to pass on 20 of the 25 basis point cut to variable home loan customers, bringing the average standard variable rate to 5.92 percent next month.
While the extra savings won’t hit the hip pocket until the New Year, the move is expected to be a much-needed shot in the arm for the retail sector just in time for Christmas and the boxing day sales periods.
How much will you save?
Borrowers with a typical $300,000 mortgage can expect to save about $50 in monthly repayments from next month, should your lender pass on the full 25 basis point cut.
Re-invest that $50 back into your home loan – that is, increase your monthly repayment, and you could save almost $18,000 in interest payments and shave more than a year off a 25 year home loan. Try using a home loan calculator, such as the one at RateCity to see how much you could save!
Want to save even more?
While rate cuts can bring a welcome reprieve, borrowers stand to save even more by shopping around. For instance, at the time of writing the difference between the average standard variable rate and one of the cheapest variable rates available is around 70 basis points, which equates to a monthly saving of a $127 for a $300,000 loan.
So take a look at the absolute rate and fees on your mortgage compared to others on the market and use this time to do your homework. Compare home loans using a site like RateCity because you could save thousands of dollars for the New Year!
So what will you do with the money saved on your home loan next month?