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RBA Cuts Cash Rate: Lenders That Have Passed on the Savings


In July 2019, the Reserve Bank of Australia (RBA) cut the cash rate from 1.25% to 1%: a new record low. This comes on the heels of the prior month’s rate cut, from 1.5% to 1.25%. 

Graph of cash rate

These rate cuts are meant to stimulate the economy and the housing market, making borrowing money more affordable.

Many lenders are cutting their own interest rates to pass on these savings to new and existing customers, which is likely to have a significant impact on the housing market. Here’s an overview of the changes that homebuyers can expect to see coming. 

Lenders That Will Cut Interest Rates


As the RBA lowers the cash rate, lenders are going to be passing on the savings to customers. These savings can be significant in terms of home loans: even a fraction of a percentage can often mean a much more affordable monthly repayment.

Since lenders have already lowered interest rates in June 2019, these interest rates are declining very fast. In terms of interest, it’s never been a better time to purchase or refinance a property. 

Interest rate decreases are generally meant to stave off the effects of property value increases. In Australia, property values have been going up for some time, making it more difficult for first-time buyers to get into the market. 

By decreasing interest rates, the government is able to encourage homeownership, without encouraging homebuyers to purchase more than they can necessarily afford.

As always, those looking for a loan should speak to a broker whom deals with multiple banks. Interest rates are negotiable, and this is the best way to get a good deal. 

Examples of these interest rate cuts are as follows:

  • ANZ Bank
      • Rate cut: 25 basis points (0.25% points)
      • Applies to: All variable interest rates for Australian home and residential investment loans
      • Effective date: 12 July 2019 (10 days after RBA decision)
      • June rate cut: 18 basis points (0.18% points)
  • Commonwealth Bank
      • Rate cut: 19-25 basis points (0.19-0.25% points)
      • Applies to: New and existing home loan customers:
        • OO P&I standard variable rate home loans (19 points)
        • Investor P&I standard variable rate home loans (19 points)
        • OO IO standard variable rate home loans (25 points)
        • Investor IO standard variable rate home loans (25 points)
      • Effective date: 23 July 2019 (21 days after RBA decision)
      • June rate cut: 25 basis points (0.25% points)
  • NAB
      • Rate cut: 19 basis points (0.19% points)
      • Applies to: New and existing customers on variable loans (OO and Investor, P&I and IO)
      • Effective date: 12 July 2019 (10 days after RBA decision)
      • June rate cut: 25 basis points (0.25% points)
  • Westpac
    • Rate cut: 20-30 basis points (0.20-0.30% points)
    • Applies to: New and existing home loan customers:
      • Variable OO P&I home loans (20 points)
      • Variable residential investment property loan P&I (20 points),
      • Variable OO IO home loans (20 points)
      • Variable residential investment property loan IO (30 points)
    • Effective date: 16 July 2019 (14 days after RBA decision)
    • June rate cut: 20-35 basis points (0.20%-0.35% points)

Source:  Australian Finance Group

These are not the only banks that are going to be cutting interest rates. Many other banks are following suit, with similar rate cuts. Most banks are cutting rates by about 25 basis points, with some cutting rates by higher or lower. And, most banks had already cut their interest rates in June. 

With lending cheap and the Coalition in charge, borrowing has improved for many buyers. 

RBA Cuts Cash Rate: Lenders That Will Pass on the Savings

Conclusion


With a rate cut in July following a rate cut in June, interest rates are now at their most favourable. 

Buyers who are interested in getting into the market should consider getting in now, especially with a number of other beneficial changes being made in the market. 

It’s becoming easier for homebuyers to purchase homes (especially first-time homebuyers), and these interest rate cuts are increasing affordability for both owner-occupants and investors.

With rate cuts, along with the government’s new deposit scheme and loosening home loan rules, this will introduce more first-time buyers into the market than ever. Historically, this has usually led to lower-priced homes going up in value as they become more sought after. 

Whether you’re an investor, a first-time homebuyer, or anything in between, the market is changing very quickly. So follow the latest industry updates by subscribing to the Shore Financial newsletter at the bottom of this page.

 

Recently, Shore Financial was named the 4th top brokerage in Australia by Mortgage Professional Australia! We could never have done it without our amazing clients. Every day we go to work energised by our mission to help them achieve their goals. So it’s only right to dedicate this recognition to them. Thank you.

 

Disclaimer: This is general information only and should not be taken as financial advice. Please speak to a Shore financial planning professional before making a decision on your home loan.

Get in touch with Shore Financial today and maximise your opportunity through property!



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