Many homeowners can start saving – regardless of what the RBA decides at their next meeting.
While you (and many other Aussies with mortgages) might be hanging out for an interest rate cut, there are steps you can take right now to reduce your repayments.
Lock it in
The average interest rate on outstanding home loans is currently 5.76 per cent. But some variable rates are as low as 5.34 per cent – that’s a potential saving of around $179 a month, more than what a typical RBA rate cut would deliver.
There are also two-year fixed rates starting from just 4.79 per cent – the lowest we’ve seen in years. That could be a smart move if you’re looking to start saving now and want some certainty in the months ahead.
If you think inflation will stay stubbornly high and the RBA is likely to keep rates on hold for a while, this low fixed rate could be worth considering as part of a “loan cocktail” to balance flexibility and stability.
It’s the equivalent of four 0.25 per cent rate cuts below the current average variable rate. That’s a holiday – or money you could put into your offset account.
Refinance – everyone else is
You could get a better rate just by simply calling your lender and asking for one. Or shop around and switch to a new lender. Visit Compare the Market to see what’s on offer and make the move.
A mortgage broker can also help with the legwork involved and make calls on your behalf.
Don’t wait for the RBA to cut interest rates, others home owners aren’t.
Data shows more Aussies are getting proactive about their home loans. In June alone, around 65,000 home loans were refinanced with new lenders. This is up 25 per cent from the previous year.
Another 43,000 were refinanced with the same lender – meaning borrowers picked up the phone, asked for a better deal, and got one.
Need free financial counselling?
If interest rates being held or even rising, keep you up at night and the bills are piling up, you might need more support than just a better home loan rate (though definitely do that too). If you’re in financial hardship, your lender is legally required to offer you assistance.
Also, it’s also a good idea to speak to a financial counsellor as early as possible. They can help you understand your options, create a budget, and deal with creditors on your behalf.
The National Debt Helpline offers free advice to people struggling with bills, fines, and repayments. Call them on 1800 007 007 for support.
