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How the 0.25% RBA cash rate cut may lower your home loan repayments

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After a long wait, the cash rate has moved for the first time in almost three years. Following months of speculation, the Reserve Bank of Australia cut the rate by 0.25%, now sitting at a historical low of 1.25%. This is a great thing for Aussies, the housing market and the current guarded approach to credit.

Over the last year, since the start of the Royal Banking Commission, homeowners and borrowers have watched banks and lenders tighten their lending policies, increase interest rates out of cycle, and without warning, and all while the housing market declines at the fastest rate in a decade.

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Aussies could save $600, or more, a year

This rate cut will have a significant impact on consumers wallets. The 0.25% drop, if applied directly and in full, could save the average Australian with an average size mortgage ($380K) $600 a year. This saving could cover other expenses such as utilities, health insurance or car insurance costs and give consumers one less thing to worry about.

Banks and lenders are already cutting rates

Following the June 4 announcement, a number of banks and lenders have already started reducing their home loan interest rates. Since the last interest rate cut, 43 lenders have made out of cycle increases over that nearly three year period impacting 47% of all home loan customers.

If your lender has not passed down this cut, it’s worth reviewing your options to see if there are loans available that better suit your needs and help put you in a financially stronger position.

Don’t miss out on savings

If you are planning to refinance or buy a property, it pays to be prepared. Make sure your home loan application details are up to date so you can be ready to go as lenders dropping their rates.

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Background: What is the RBA cash rate update?

On the first Tuesday of every month (except in January), the Reserve Bank of Australia (RBA) sets the cash rate. They decide whether to raise it, lower it or leave it the same, depending on a number of factors, including the performance of the Australian dollar, the state of the housing market and inflation.

The last time the cash rate rose was in November 2010. Since then, the general trend has been for the rate to remain the same, decreasing only every so often. Prior to June 4 2019, The last decrease was in August 2016.

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*repayment rate based on a $380,000, P&I loan over a 20-year term decreasing from 4.25%/4.25% to 4.00%/4.00%.

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Tags: rba cash rate, reserve bank, interest rate, refinance, new purchase

Check today's low rates

Tell us what you are looking for and see if you can save.

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Check today's low rates

Tell us what you are looking for and see if you can save.

Search rates
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Important legal stuff

Lendi is the trading name of Lendi Pty Ltd (ACN 611 161 856, Credit Representative 518849), a related body corporate of Auscred Services Pty Ltd (ACN 164 638 171, Australian Credit Licence 442372). We will never sell your email address to any third party or send you nasty spam, promise.
Lendi is a privately owned and operated Aussie business. Our mission is to provide Aussies with the right experience when choosing a home loan from our panel of lenders including ClickLoans, a related body corporate of Auscred Services. Although Lendi compares over 1600 products from over 35 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. While Lendi is 40% owned by founders and employees, we have also been supported by some great minority shareholders including Bailador, Macquarie Bank Ltd and a number of Australian sophisticated investors. We have an independent and founder led board.
WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years.
EXAMPLE: This example is current as at 20th October 2016. A Click Loans Online Principal and Interest Loan of $150,000 over 25 years has monthly repayments of $767. This is calculated based on the interest rate of 3.69%, comparison rate of 3.69%, upfront fees of $0 and annual fees of $0.
IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria.
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