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- 1 year on: cash rate to hold at 4.35%, as home loan rates tumble
1 year on: cash rate to hold at 4.35%, as home loan rates tumble
The Reserve Bank of Australia is today expected to keep the cash rate steady at 4.35 per cent, marking a gloomy one-year anniversary for households.
The RBA might be set on a holding pattern for now, however, a flurry of lenders have been slashing variable home loan rates as competition in the market heats up and expectations of cash rate cuts rise.
RateCity.com.au research shows:
- Around 70 lenders have cut at least one variable home loan rate in the past 12 months, including two of the major banks – CBA and NAB
- 34 banks have at least one variable home loan under 6%
- One of the lowest ongoing variable rates for owner-occupiers is 5.75%.
Borrowers should not wait for a rate cut to come to them
For borrowers who have had their home loan for more than a year or two, chances are they are on a higher interest rate than someone who has refinanced. That’s because many lenders reserve their lowest rates for new customers.
RateCity.com.au analysis shows an owner-occupier with a $500,000 loan balance today, could potentially save $12,315 over the next two years by refinancing to one of the lowest variable rates on the market, even after factoring in switching costs.
Potential savings from refinancing to one of the lowest variable rates
Based on a $500,000 loan with 25 years remaining
Rate | Monthly repayments | Cost - next 2 years | Difference to doing nothing | ||
Monthly repayments | Cost-2 years | ||||
Complacent borrower | 7.11% | $3,569 | $65,108 | ||
One of the lowest variable | 5.75% | $3,146 | $52,793 | -$424 | -$12,315 |
Source: RateCity.com.au. Notes: based on an owner-occupier paying principal and interest with 25 years remaining. Assumes mortgage rates move in line with ANZ's current cash rate forecast. Refinancing option includes an estimated $1250 in switch fees. Does not include ongoing fees.
RateCity.com.au money editor, Laine Gordon, said: “The cash rate has been stuck in neutral for almost a year, however, variable home loan rates have started to drop.”
“In the past year, around 70 banks have lowered at least one variable home loan rate, but not all customers will have had a rate cut,” she said.
“It’s a timely reminder to check your home loan rate and compare it to what your bank is currently offering new customers. If you are being taken for a ride, then now is the time to do something about it.
“By all means haggle, but consider making the switch. The sharpest rates are typically reserved for new customers, no matter how good your negotiating skills are, so it’s worth considering refinancing.
“If you are thinking of switching lenders, firstly do a quick check of how much equity you have in your loan because this is often crucial in understanding your options. If you’re an owner-occupier and own at least 20 per cent of your home already, then you’re in the box seat when it comes to rates. Use it to your advantage.
“There are now 34 banks on the RateCity database with variable rates under 6 per cent, so if you haven’t refinanced your home loan in a while there’s a good chance you’re paying more than you should be. Switching could save you thousands of dollars,” she said.
Lowest variable rates on the RateCity.com.au database
Lender | Advertised rate from: |
Abal Bank | 5.75% |
Police Bank* | 5.84% |
Bank of China | 5.88% |
The Mutual Bank | 5.89% |
Source: RateCity.com.au. Note: excludes introductory and green loans. ^Discounted for the first 2yrs. *Includes Border Bank & Bank of Heritage Isle.
Compare home loans in Australia
5.99%
5.90%
$3,218
Australian Credit Licence 234945
Fees & charges apply
- Promoted
- 2024 Award Winner
- Special
- Owner Occupied
- Variable
- 20% min deposit
- P&I
6.39%
6.40%
$3,342
Australian Credit Licence 233714
Fees & charges apply
- Promoted
- Cashback
- Owner Occupied
- Variable
- 20% min deposit
- P&I
6.29%
6.20%
$3,311
Australian Credit Licence 234945
Fees & charges apply
- Promoted
- Special
- Investor
- Variable
- 20% min deposit
- P&I
6.84%
7.16%
$3,611
Australian Credit Licence 233714
Fees & charges apply
- Promoted
- Owner Occupied
- Variable
- 5% min deposit
- P&I
7.09%
7.09%
$3,563
Australian Credit Licence 234527
Fees & charges apply
- Promoted
- Cashback
- Owner Occupied
- Variable
- 10% min deposit
- P&I
6.95%
7.15%
$2,896
Australian Credit Licence 234945
Fees & charges apply
- Promoted
- Investor
- Variable
- 20% min deposit
- Interest Only
7.20%
6.90%
$3,000
Australian Credit Licence 234945
Fees & charges apply
- Promoted
- Investor
- Variable
- 40% min deposit
- Interest Only
6.49%
7.25%
$2,704
Australian Credit Licence 234527
Fees & charges apply
- Promoted
- Cashback
- Owner Occupied
- Fixed 2 years
- 10% min deposit
- Interest Only
7.24%
7.56%
$3,183
Australian Credit Licence 233714
Fees & charges apply
- Promoted
- Investor
- Variable
- 30% min deposit
- Interest Only
7.46%
7.27%
$3,108
Australian Credit Licence 230686
Fees & charges apply
Tailored Home Loan
- Owner Occupied
- Variable
- 10% min deposit
- Interest Only
7.84%
7.84%
$3,806
Australian Credit Licence 234527
Fees & charges apply
Standard Variable Investment Loan
- Cashback
- Investor
- Variable
- 20% min deposit
- P&I
9.38%
9.52%
$4,327
Australian Credit Licence 234945
Fees & charges apply
Investment Standard Variable Rate Home Loan
- Investor
- Variable
- 5% min deposit
- P&I
Product database updated 28 Dec, 2024
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Promoted home loans
Variable Rate Home Loan LVR < 80%
Real Time Rating™
- 2024 Award Winner
- Special
- Owner Occupied
- Variable
Interest rate p.a.
5.99%
Comparison rate* p.a.
5.90%
Australian Credit Licence 234945
Fees & charges apply
Basic Home Loan
Real Time Rating™
- Cashback
- Owner Occupied
- Variable
- 20% min deposit
Interest rate p.a.
6.39%
Comparison rate* p.a.
6.40%
Australian Credit Licence 233714
Fees & charges apply
Variable Rate Home Loan LVR < 80%
Real Time Rating™
- Special
- Investor
- Variable
- 20% min deposit
Interest rate p.a.
6.29%
Comparison rate* p.a.
6.20%
Australian Credit Licence 234945
Fees & charges apply
Basic Variable Rate (Flexi First Option) Home Loan
Real Time Rating™
- Owner Occupied
- Variable
- 5% min deposit
- P&I
Interest rate p.a.
6.84%
Comparison rate* p.a.
7.16%
Australian Credit Licence 233714
Fees & charges apply
Product data updated on 28 Dec 2024
