While millions of mortgage-holding Aussies wait with bated breath over the next Reserve Bank of Australia (RBA) cash rate decision, some lenders are taking action and cutting rates early.
Officially, the RBA cash rate has been on hold for a record 33-months at 1.5 per cent, and Governor Philip Lowe has finally given a hint that there may be a cut next month. This means that we could be seeing banks passing on those cuts to customers over the next few weeks.
Some lenders are looking to jump the gun and get in early, making the call ahead of an RBA rate cut announcement and slashing interest rates now – and it could save customers around $4000 each year.
Mortgage House currently has the lowest ongoing variable rate on RateCity’s database at 3.44 per cent, and as of Friday 24 May, Mortgage House is dropping it to a new industry low of 3.29 per cent.
Mortgage House’s Home Loan Prime Early Bird Rate Cut Special will be available for new customers, including refinancers looking to grab a low rate deal.
When considering refinancing to a more competitive loan product, it’s important you consider how much it will cost to refinance. This includes anything from upfront costs with your new lender, discharge fees from your current lender, and break fees if you’re currently on a fixed rate.
Refinancers moving to Mortgage House will be able to take advantage of a cashback offer up to $1500. A $445 settlement and $395 legal fee will apply, however it’s important you weigh these up in respect to the savings you may make through refinancing.
RateCity research has found that for a home loan customer on an average of the big four banks’ discounted variable rate of 4.63 per cent, switching to this loan at 3.29 per cent will save them almost $4000 a year.
How much you’d save if you switched from the average Discounted Variable Rate from the big 4 banks to the lowest variable rate in Australia
||Interest rate (%)||Monthly loan repayments||Estimated savings per month||Estimated savings over 12 months|
|Mortgage House special||3.29%||$1958||–||–|
|Big 4 bank average package rate||4.63%||$2286||$322||$3868|
Assumptions: $400,000 owner occupier loan on a 25 year home loan, making monthly P&I payments. Calculations are estimations. Annual, switching and termination fees included in calculations.
Cashback offer for refinancers has not been included and is up to $900 in the first year. Big four bank average is based on discounted variable rates as of 24/05/19. Discounted variable rates include an offset, the Mortgage House special rate does not.