Last Tuesday the RBA cut interest rates to the lowest point we’ve seen in over half a century. To put this historic move into context, the last time rates were this low, our country had only had television for four years!
As a mortgage broker, I find that most home owners I meet with do not know the current interest rate payable on their home loan – given your mortgage is likely to be your biggest household expense, this is quite alarming.
When taking out a new loan, it’s important to not only know what interest rate you’re starting out on, but what it will default to after a fixed or ‘honeymoon’ period. Quite often people get seduced by an attractive upfront interest rate for the first couple of years only to find they revert back to the bank’s standard variable rate soon after.
With the RBA cutting rates by a further 25 basis points, now is a perfect time for you pull out that home loan statement and check your rate! You may have heard that your bank has passed on the rate cut, but did they pass it directly on to you and your loan product? Is this rate competitive when compared to other banks? These are just a couple of questions you should ask yourself each time interest rates drop.
For a home loan of $350,000, a rate drop of 25 basis points takes $73 off your monthly repayments OR if you can comfortably afford it, why not maintain the same repayments and reduce your debt more quickly? That extra $73 per month could save paying over $36,000 in interest over the next 30 years.
Why not spend some time playing around on an online mortgage repayments calculator and see how much you can save.
Mortgage Broker, Loan Market
mob: 0438 284 488