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Record low rates easing the burden for mortgage holders
The Reserve Bank of Australia (RBA) has kept the cash rate on hold at 0.25 per cent at a time when a growing number of Australians are struggling to make their monthly repayments.
Already 320,000 homeowners have been approved to defer their home loan repayments for up to six months. That’s an estimated $3.3 billion in monthly repayments that won’t be made, according to the Australian Banking Association (ABA).
However, for households that can still make their mortgage repayments, record low interest rates are easing the burden.
Analysis from RateCity.com.au shows the average big four bank home loan customer is now paying $2,060 per month in repayments, that’s $188 less a month than May last year.
Monthly repayments now compared to a year ago on a $400,000 home loan
| Rate | Monthly Repayment | Monthly Savings | |
| May-19 | 4.61% | $2,248 | - |
| May-20 | 3.75% | $2,060 | $188 |
Source: RateCity.com.au
Notes: Rates are based on the average big four bank discounted variable rate in May 2019 with 25 years remaining for an owner occupier paying principal and interest. Calculations are based on the average rate cuts passed on over this time.
Households fortunate enough to still have their regular jobs may actually find themselves better off, at least in the short-term.
As well as making lower mortgage repayments, some families are saving money on things like petrol, public transport, eating out, gym fees and childcare.
If a homeowner with a $400,000 loan paid an extra $100 a week for the next six months, they’d save around $3,500 in interest in the long run. This is based on the average owner-occupier rate on RateCity.com.au of 3.46 per cent with 25 years remaining.
RateCity.com.au research director Sally Tindall said, “Some families are up against the wall financially. They need immediate relief on their mortgage and it’s good to see they’re getting it.”
“However, for anyone fortunate enough to be saving money during COVID-19, it’s worth thinking about putting this cash to good use.
“Paying down debts like credit cards or putting extra money into the mortgage can potentially save people thousands of dollars in the long term and see them debt free months earlier,” she said.
Lowest rates from some of Australia’s largest banks
| Bank | Lowest variable | Lowest 2-year fixed | Lowest 3-year fixed | Lowest 5-year fixed |
| CBA | 2.79% | 2.29% | 2.29% | 2.99% |
| Westpac | 2.93% | 2.19% | 2.19% | 2.69% |
| NAB | 2.84% | 2.29 % | 2.29% | 2.79% |
| ANZ | 2.72% | 2.19% | 2.29% | 2.69% |
| St George | 2.69% | 2.19% | 2.19% | 2.69% |
| ING Bank Australia | 2.74% | 2.09% | 2.14% | 2.54% |
| Macquarie Bank | 2.69% | 2.39% | 2.39% | 2.74% |
| Bank of Melbourne | 2.69% | 2.19% | 2.19% | 2.69% |
| Bendigo Bank | 2.89% | 2.29% | 2.29% | 3.19% |
| Suncorp | 2.78% | 2.29% | 2.49% | 2.69% |
| Bank of Queensland | 3.32% | 2.29% | 2.35% | 2.99% |
| HSBC Bank Australia | 2.65% | 2.25% | 2.25% | 2.60% |
Source: RateCity.com.au
Note: LVR and loan size restrictions may apply.
Disclaimer
This article is over two years old, last updated on May 5, 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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Product database updated 16 Nov, 2024
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