RBA cuts interest rates, borrowers rejoice
That's the sound heard around the country when the Reserve Bank announced it was cutting interest rates by 0.50% last week.
Yessir, for all those being slowly squeezed under the weight of a home loan this is as good as any Christmas present (if not better, as the RBA doesn't want one in return).
So just over a week from the RBA's decision, now is a great time to look at how the banks have reacted and what it means for you.
Those hoping to see the whole 0.50% slashed immediately from their current variable home loan rate will most certainly be disappointed. So far, only one lender (WAâ€™s Unicredit) has passed on the full cut, with the rest of the market moving between 0.4% and 0.25%.
Here is a look at the changes made by the Big 4 to their standard variable rate loans (excluding ANZ who will announce their decision on Friday), as well as the top 3 home loans on the market:
|Bank||Home Loan||Old Rate||New Rate||Change|
|NAB||Tailored Home Loan||7.31%||6.99%||0.32%|
|CommBank||Standard Variable Rate||7.41%||7.01%||0.4%|
|Westpac||Rocket Repay Home Loan||7.46%||7.09%||0.37%|
These rate changes will mean monthly savings of roughly $65 for $300,000 home loans. Not bad.
Things get really exciting when you consider a switch to one the market leading home loans rates. Taking a $300,000 mortage from the best standard variable loan of the Big 4, NAB's Tailored Home Loan to their online subsidiary UBank would save you… wait for it… $216 a month.
That'sover $67,000 over the 25 year life of the loan. That's not bad. That's amazing.
Find out exactly what you could save with Mozo's world famous home loan health check.
With the good comes bad, and this time around it is the nation's savers who come out behind. It is precisely what the RBA wants, people to save less and spend more and give the economy a much needed boost.
Little consolation when you have your eyes on a big expensive new car or trip around the Mediterranean.
All is not lost however, as the banks have been surprisingly slow to decrease savings rates. Only 10 out of 72 savings account providers have cut rates since the RBA's move - a definite sign of competition in the market. For term deposits, the changes are certainly flowing through, but most providers are not cutting by the full 0.50%.
What does the new budget mean to you? Read on to find out.