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- RBA fires off an emergency rate cut, Westpac passes it on in full
RBA fires off an emergency rate cut, Westpac passes it on in full
Find out who is passing on the cut and by how much in RateCity’s live rate cut list
The RBA has been forced to make an emergency rate cut today, slashing official rates to a new record low of 0.50 per cent.
The big question is how much banks will pass on to homeowners.
Already, Westpac, Homestar Finance and Athena have announced they will pass on the full 0.25 per cent to new and existing variable rate customers. This will see Westpac’s lowest variable rate drop to 2.93 per cent and Homestar’s lowest variable rate fall to 2.44 per cent – a new market low.
Reduce Home Loans will pass on a 0.25 per cent cut, but only for new variable rate customers, which also takes its lowest rate to 2.44 per cent. Find out who has moved in RateCity’s live rate cut list.
Sally Tindall, research director at RateCity.com.au, said: “Westpac should be commended for passing on a full cut to their variable rate customers. Hopefully this will prompt the other big four banks to follow suit.”
“This decision will save the average Westpac home loan customer around $55 a month or $662 a year.
“Some banks may choose not to pass on the full cut, due to pressure on their profit margins. Variable rate customers should call their bank and find out what they intend to do.
“If borrowers aren’t happy with the cut their bank is passing on, they can choose to take their business walking.
“Switching lenders in this competitive environment is likely to secure a far bigger cut than the 0.25 per cent on offer from the RBA.
“A number of smaller lenders have already committed to cutting their rates by the full 0.25 per cent, sending variable rates to a new low of 2.44 per cent,” she said.
Potential savings
| 0.25% cut | 0.15% cut | 0.10% cut | ||||
| Loan size | Mthly savings | Annual savings | Mthly savings | Annual savings | Mthly
savings | Annual
savings |
| $400,000 | $56 | $675 | $34 | $406 | $23 | $271 |
| $500,000 | $70 | $843 | $42 | $508 | $28 | $339 |
| $750,000 | $105 | $1,265 | $63 | $761 | $42 | $508 |
| $1,000,000 | $141 | $1,686 | $85 | $1,015 | $56 | $678 |
Source: RateCity.com.au. Assumes an owner occupier paying principal and interest over 30 years. This scenario is based on the current average rate of 3.73 per cent.
Who’s moved?
| Lender | Cuts | New lowest variable rate |
| Westpac | 0.25% | 2.93% |
| Homestar Finance | 0.25% | 2.44% |
| Reduce Home Loans | 0.25% | 2.44% |
| Athena | 0.25% | 2.59% |
Source: RateCity.com.au
Has your bank cut your rate? Here’s what to do now
- Call your bank and ask them whether they are cutting your rate, by how much and when.
- Check what other lenders are offering. Even if your bank is passing on the cut, you might find a better deal from a competitor.
- If your bank doesn’t pass on the cut in full, or you discover you’re paying too much, consider switching. The beauty of a variable home loan rate is that you’re well within your right to take your business elsewhere.
How to put a rate cut back into your home loan
- Find out if your bank is passing on the rate cut, and by how much.
- Work out what your new monthly repayments will be and what this means for your budget.
- If you decide to put that money back into your mortgage, call your lender up and ask them to keep your monthly repayments the same.
Disclaimer
This article is over two years old, last updated on March 3, 2020. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent home loans articles.
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