March 2020 brought with it a lot of unexpected changes. The COVID-19 pandemic saw businesses forced to close their doors across Australia as social distancing laws were put in place for our protection.
With the Reserve Bank of Australia (RBA) making an emergency cash rate cut only two weeks after they cut rates at the beginning of March, the cash rate now sits at 0.25 per cent, just a quarter of a percent away from zero.
This means two things: good news for mortgage holders and bad news for depositors. But more importantly, it means there’s never been a more important time to compare your financial options and see if there is a better deal out there.
Fixed home loans offering some stability
Following two RBA cash rate cuts, lenders dropped their rates to historic lows. Fixed home loan rates fell as low as 2.09 per cent from ING and Reduce Home Loans.
While it’s impossible to predict the bottom of the market, especially amidst a global pandemic, RBA Governor Philip Lowe has indicated the cash rate will remain at 0.25 per cent “for some years, but not forever”. For customers looking for a little more stability, a fixed home loan may be one option to consider.
Lowest fixed rates on the RateCity.com.au database:
- ING Orange Advantage 2-year fixed home loan at 2.09%
- Reduce Home Loans Home Owners Dream 2-year fixed home loan at 2.09%
- Well Home Loan 2-year fixed Well Balanced Home Loan at 2.09%
- Freedom Lend 2-year Freedom Fixed Home Loan at 2.09%
New home loan customers getting low rates
On April 7, the RBA held the cash rate at an historic low of 0.25 per cent, and Australia’s largest lender, CBA, dropped its lowest variable rate to 2.79 per cent.
However, this rate is only for new customers with at least 20 per cent equity in their property. For some Australians, this means best way to get this rate discount is to turn yourself into a new customer (only if switching home loans is financially viable for you at the moment).
Lowest new customer rates for home loans on RateCity.com.au database:
- Homestar Finance Star Essentials Home Loan at 2.44%
- Well Home Loans Well Balanced Home Loan at 2.47%
- Pacific Mortgage Group Standard Variable Home Loan at 2.49%
Savings accounts still paying rates above inflation
Savers have taken a beating over the last year, as interest rates continue to fall for savings accounts. Thankfully, there are still a handful of savings accounts offering interest above inflation.
Highest rates for conditional savings accounts on RateCity.com.au database:
- MyState Bank’s Bonus Saver has a maximum interest rate of 2.00%, if you deposit $20 a month and make 5 transactions in a linked transaction account.
- Bank of Queensland’s Fast Track Savings Account has a maximum interest rate of 2.00%, if you deposit $1,000 a month in a linked Day2Day transaction account.
- 86400’s Save Account has a maximum interest rate of 2.00%, if you deposit $1,000 each month in a linked transaction account.
- Suncorp Bank’s Growth Saver has a maximum interest rate of 1.90%, if you grow your net balance by $200 or more and make no more than one withdrawal a month.
Get debt under control with credit card rates under 9%
Credit card debt is always a concern. But it may balloon on the back of the coronavirus, with some credit cards charging interest rates as high as 24.99% and the temptation to spend sitting in most of our wallets.
If you’re the type of card holder always paying interest on your purchases, or if you’re concerned you may lose your regular income, a low rate credit card may be a more responsible option to consider compared to cards charging very high interest rates.
Credit cards with lowest interest rates on RateCity.com.au database:
- G&C Mutual Bank Low Rate Visa Credit Card at 7.49%
- Auswide Bank Low Rate Visa Card at 8.20%
- American Express Low Rate Credit Card at 8.99%
- Community First Credit Union Low Rate Credit Card at 8.99%
- Move Bank Low Rate Credit Card at 8.99%
Are you struggling? Some banks are offering relief
COVID-19’s impact on our economy cannot be understated. Around 6 million workers are expected to need Government financial support due to their company being forced to close due to social distancing laws, a loss of 30 per cent of revenue, and other COVID-19-related reasons.
If you can’t make a repayment because of COVID-19, please talk to your bank and see what hardship support they can offer you, before you miss a payment. Banks are in a position to try and help customers where they can, so take advantage of this.
If you need independent help, try the National Debt Hotline: 1800 007 007.