Many of us got a shock when the Reserve Bank of Australia met last week. After ten consecutive months of no movement the Reserve Bank dropped official cash rates by 0.25% to a historically low level of 1.75%.
We were then pleasantly surprised when some of our major Banks and lenders quickly announced that they would pass on the full 0.25% p.a. reduction to variable rate loans– albeit in most cases some weeks down the track.
So now a week later the question most borrowers are asking is – Did my lender drop their variable interest rates? If so, was it the by the full 0.25% p.a.?
In fact many media outlets are “smelling blood in the water” and preparing articles on who did, or probably more accurately, who didn’t pass on the full cash rate reduction.
However, as a Finance Broker I tend to think that whether your bank did or didn’t pass on the rate cut is somewhat irrelevant. Is this a strange statement to make? Maybe!
Don’t get me wrong, I think it is important that home owners are focusing on one of their biggest regular costs in their mortgage. But, I just think focusing on what your lender did following one RBA announcement is too narrow a focus.
Borrowers should be focusing on the total cost of their mortgage and whether their loan product remains competitive in the market. In fact, borrowers should be looking even further beyond just the costs and assessing whether their loan product has the flexibility and features they desire to meet their individual needs and financial goals.
The RBA reduction gives us all the perfect opportunity to review our current loans and assess if there is a better option in the market. It could be that by having the knowledge of what is available in the market you are able to negotiate improved terms with your existing lender.
Your local Finance Broker will be able to quickly review your current loan against your needs and financial goals to give you an update on how it compares to other offers in the Market. They can even negotiate on your behalf with lenders.
So, if you want to know if your Bank passed on the RBA rate cut, or if your current loan is still competitive in meeting your needs, I would be more than happy to have a chat!
Mobile 0477 778 330.