Homeowners hoping for mortgage relief have been urged to negotiate their own rate cuts or switch to cheaper rates in order to save in spite of the Reserve Bank decision to sit on the cash rate.
Compare the Market Economic Director David Koch said that while today’s decision may be disappointing, there was hope for borrowers willing to put in some leg work to either negotiate or switch to a better rate.
“There can be a 0.50% difference between some of the advertised rates on Compare the Market’s home loans panel so you can effectively create your own rate cut by shopping around,” Mr Koch said.
“That could represent a saving of $210 on monthly repayments – or $2,520 over a year – for someone with an average $660,000 loan.
“And that’s just looking at rates for new customers, which we know are often much more enticing than the rates available to older customers who have not refinanced in a number of years.”
A survey of homeowners by Compare the Market found that around 65% of respondents that had mortgages for +3 years had not refinanced in more than three years.
Mr Koch said that while the RBA was likely to deliver more relief through rate cuts later in the year, it was a good idea to compare your options and get ahead.
“We can’t rely on the Reserve Bank to deliver mortgage relief. That means we have to be more vigilant ourselves to make sure we’re getting a good deal,” Mr Koch said.
“Homeowners who have been with the same lender for a number of years need to make sure they are at a rate that is commensurate with what new customers are getting.
“Compare what other lenders are advertising to see what else is out there. If your lender won’t match the market leading rates, it might be time to switch.
“Also look out for cashback offers for refinancers, which can be worth thousands of dollars. When so many families are stretched to the max covering everyday essentials, we can’t afford to waste money on our mortgages. It only takes a few minutes to run a quick comparison and look for a better rate.”
Impact of multiple rate cuts on monthly repayments
| Loan size | Impact of a 0.25% rate cut | Impact of x2 0.25% (0.50%) | Impact of x3 0.25% rate cuts (0.75%) | Impact of x4 0.25% rate cuts (1%) |
| $500,000 | $81 | $161 | $256 | $318 |
| $600,000 | $97 | $193 | $307 | $382 |
| $750,000 | $122 | $242 | $384 | $478 |
| $900,000 | $146 | $290 | $461 | $573 |
| $1,000,000 | $162 | $322 | $512 | $637 |
| *Calculations assume an owner-occupied loan with a variable interest rate of 6.3% that is reduced to 5.3% after four 0.25% rate cuts passed on in full by the bank. It assumes a 30-year loan term, with no ongoing fees. This does not take into account the reduction of the loan balance over time. | ||||
For more information, or to request an interview with Kochie, please contact:
Sarah Orr | 0401 044 292 | [email protected]
Notes for editors
Compare the Market is a comparison service that takes the hard work out of shopping around. We make it simple for Australians to quickly and easily compare and buy insurance, energy and home loans products from a range of providers. Our easy-to-use comparison tool helps you look for a range of products that may suit your needs and benefit your back pocket.
