The RBA announced record low rate cuts in early March
Find out what that means for you, whether you’re looking to buy a new home or you’re already a homeowner.
Coronavirus has dominated the headlines over the last few weeks. In the wake of its economic effects, the Australian government stepped up in early March, asking the RBA to pass on any available interest rate cuts possible. And cut they did, announcing an all time low rate of 0.50%.
RBA Governor Philip Lowe said, “The coronavirus has clouded the near-term outlook for the global economy and means that global growth in the first half of 2020 will be lower than earlier expected.
“The global outbreak of the coronavirus is expected to delay progress in Australia towards full employment and the inflation target. The Board therefore judged that it was appropriate to ease monetary policy further to provide additional support to employment and economic activity.”
What do the new rates mean for home buyers?
Since the announcement of the new rates, all four major banks have passed the savings on by cutting home loan rates. Many other smaller lenders also followed suit, with new rates already starting to come into effect.
If you’re looking for financing, now is the time to strike.
For those who have a deposit and are ready to finance, you’re in a prime position to apply for a loan. The benefit of these new rates is two fold:
- A decreased cash rate brings increased confidence from lenders to give out home loans.
- Lower interest rates will help you save thousands over the course of your mortgage.
Your chance of securing a loan, with favourable terms, is at an all time high.
If you don’t have a full deposit saved up just yet, don’t worry. Low deposit programs are available to help you get onto the property ladder.
What do the new rates mean for new homeowners?
If you’re already bought your dream home, you won’t be left out. The new rates serve to benefit existing customers as well.
Since lenders have decided to pass on the decreased rates via their products, you have a couple of options:
- Refinance: Approach your lender to discuss refinancing your home loan to lower your monthly payment. Make sure you discuss your options thoroughly as this is generally only worth the trouble if the new rate is more than 1% lower than your existing rate.
- Low interest rates: Keep your mortgage as it is and enjoy a lower interest rate. As long as the rates are down, you could see significant savings each month.
The new rates aim to provide relief to all Australians after months of unforeseen challenges.
Governor Lowe said the Board “will continue to monitor developments closely and to assess the implications of the coronavirus for the economy. The Board is prepared to ease monetary policy further to support the Australian economy.”