Rate cut madness: what it means for you

Last week’s Reserve Bank decision to cut the official interest rate to a record low of 2.50% saw borrowers bathing in bliss while savers seethed. While it’s inevitable that there will be winners and losers when rate changes happen, it’s our job to ensure that you’re on the winning team.

Borrowers

Already 18 of Australia’s top 22 home loan lenders have slashed their standard variable home loan rates.

The big surprises so far? All bar one (a credit union) have passed on the full rate cut. Even the Big 4 banks have behaved uncharacteristically well. Westpac even trumped the RBA by lopping off 0.28% from its home loan rates. Check out our naughty or nice tables to see the latest info on your lender.

If you have more than 20% equity in your home then it is a golden time to refinance your home loan. NAB is offering a headline grabbing $1000 cashback offer to anyone who refinances before 30 September, and its online subsidiary UBank is giving away a $500 gift card if you apply before 18 August.

Hottest variable offers right now:

Loans.com.au

Blackboard special (Purchases only, LVR<80%)

4.49% (4.51% comparison rate)

Find out more

Loans.com.au

Blackboard special (Purchases and refinance, LVR <80%)

4.55% (4.57% comparison rate)

Find out more

UBank

UHome Loan (refinance only)

4.62% (variable and comparison rate)

Find out more

iMortgage

iMortgage Essential (purchase or refinance, <90% LVR)

4.69% (4.71% comparison rate)

Find out more

IMB

introductory variable (for first 12 months)

4.91% (5.65% comparison rate)

Find out more

Fixed rates are still up to 1% lower than variable rates so it’s a great time to fix at least part of your loan. The Greater Building Society’s 1 year fixed rate is a rock bottom 3.99%, and there are more than 48 lenders offering fixed loans under 5%

Top 1 year fixed rates:

Greater Building Society

Fixed Rate Home Loan (Ultimate Home Loan Package)

3.99% 1 year fixed (5.32% comparison rate)

Find out more

Newcastle Permanent

Fixed Rate

4.39% 1 year fixed (5.38% comparison rate)

Find out more

AMP

Fixed Rate Loan (over $250k, professional Package)

4.69% 1 year fixed (5.56% comparison rate)

Find out more

CUA

Fixed Home Loan over $250k

4.89% 1 year fixed (5.32% comparison rate)

Find out more

IMB

Fixed Rate (LVR <90%)

4.94% 1 year fixed (5.53% comparison rate)

Find out more

 

Savers

Although savers have every reason to sulk about record low rates, the most important thing is to ensure that the value of your stash stays on top of inflation. The average ongoing savings rate currently stands at 2.82%, and barely hovers above inflation figures for the year to June at 2.4%.

We’ve crunched the numbers and worked out that to beat both inflation and tax, you’ll need to earn a savings rate above 3.5%. So check your rate now and get switching pronto if you’re below the breakeven point to avoid going backwards on your savings!

Here are our top savings and term deposit picks:

RAMS Saver

4.76% (min. $200 deposit, no withdrawals)

Find out more

RaboDirect High Interest Saver

4.76% (bonus rate for 4 months)

Find out more

IMB Term deposit

4.50% for 5 years

Find out more

Bankwest Term deposit

4.30% for 5 years

Find out more

ING DIRECT Term deposit

4.20% for 2 years

Find out more


Rate cut madness: what it means for you was last modified: June 29, 2015 by Mozo

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2 Comments - Write a Comment

  1. Why would you recommend for people to lock away their money in a 5 year term deposit?

    Surely interest rates cannot stay THAT low for THAT long.

    Locking away for 5 years is plain silly in my opinion if you are a saver. Even 2 years is probably not that wise.

    For mortgage holders, it is obviously a different story and locking in rates could be useful. However, that’s also provided they have no intention to SELL or REFINANCE during that time. Otherwise, the break fees (a.k.a ‘Economic Cost’) would be an absolute killer!

    Reply
  2. I have found that the online savers offered by banks have a rate that is much better than term deposits and they are no restrictions on deposits or withdrawals.

    Reply

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