Rate cut 'could cause misery' for home loan holders
Although those looking to compare home loans may have welcomed the Reserve Bank of Australia’s (RBA’s) decision to cut the cash rate by 25 basis points, consumers stuck on fixed-rate home loan deals may have met the news with a groan.
News.com.au reports that for those who strapped themselves into an average fixed home loan a year ago, they are likely to be paying nine per cent on their mortgage, compared to the 5.55 per cent typical on a fixed rate home loan in 2009.
As such, people could be paying an extra $529 mortgage repayments every month because of their decision to fix before the RBA’s rate cutting spree.
However, those who are thinking of breaking early on their home loan have been warned that they could be hit with hefty fees for doing so, with charges of $20,000 common on a $500,000 mortgage.
Elsewhere, the Brisbane Times has reported that despite the historically low interest rates on home loans, Aussies have all but deserted fixed rate deals in the expectation that the RBA will carry on making cut after cut.
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