An ideal time for mortgage holders.

News & Information

This week, the Reserve Bank of Australia (RBA) has delivered homeowners further good news after cutting the official cash rate by 25 basis points to a record low 2.0%.

In the lead up to the May announcement, economists were torn on whether the RBA would drop or leave the cash rate as several factors needed to be considered, such as rising inflation, the booming property market, strengthening employment and the Australian dollar increase.

Since February, we’ve seen two decreases in the official cash rate. Where lenders or banks passed on the full 50 basis point drop, we saw savings of over $100 per month on the average loan amount of $350,000. This brings the question of what to do with this money, which seems pretty simple. The Government has suggested that it's time to spend up, however, if you were to deposit that extra $100 back into your loan, it could decrease the term by 3 years!  


Our table highlights the expected decrease in monthly repayments that you could expect, if you’re lender passed on this months full 25 basis point decrease.

These figures are based on Principal & Interest repayments.   

This brings us to the next big question, is now the ideal time to fix your home loan? Fixed rates are set by economists that predict the 2 - 3 year future outlook. With rates at the lowest in history, the expected chance of them coming down much more is minimal, however both Chief Economists at Commonwealth Bank and Macquarie Bank have recently predicted that they believe the cash rate will drop by a further 25 basis points to 1.75%.

In addition, HSBC recently slashed their 3 year fixed rate to just 3.95% while BOQ and ME Bank also lowered their fixed rates to 3.99%. With access to over 30 lenders, the lowest fixed rate available to Let's Finance is an incredible 3.79% which can be locked in for 12 months. If you're not willing to try your luck and hold out, there is also the option of a splitting your loan. 

If your pocket isn't seeing the benefits of the cash rate decrease, perhaps it's time to switch lenders and save. See our 5 simple questions or contact your Home Loan Specialist for more information. 


This is a general information guide only and does not take individual financial circumstances into account and therefore must not be relied upon. Please consult a Home Loan Specialist for advice specific to your financial situation. Rates correct at 07-05-15 and are subject to change. Contact the office on 08 9315 8888. 

Category: News & Information