What does the RBA rate announcement mean for your home loan?
The Reserve Bank of Australia dropped interest rates to a record low of 0.1% on 3 November, making it an exciting time to be in the property market. They’ve not raised rates since.
Homeowners can try to use the cheaper rates to leverage a better deal on their mortgage, while buyers can potentially enjoy more borrowing power.
Here’s what you need to know about what the RBA’s interest rates mean for your mortgage.
- With the RBA’s latest announcement, interest rates in Australia are at historic lows.
- Low interest rates mean homeowners could make significant savings on their monthly mortgage by refinancing.
- New home buyers may find some exceptionally good value home loans on the market, so it’s smart to get your mortgage pre-approvals in place.
- Rate Comparison specialists compare home loan rates from more than 30 mortgage providers, helping you find the best rate for your needs.
What does the Reserve Bank of Australia announcement mean for me if I have a mortgage?
With the RBA’s historically low interest rate announcement, homeowners are in a position to get incredible value on their current mortgage.
It creates a market that very much favours you as a customer: home loan providers are reducing their rates and competing against each other for your business.
So what does that ultimately mean if you’re currently paying off your home loan? It means now may be the perfect time to refinance and make a significant saving on your monthly expenses.
And by comparing refinancing options with Rate Comparison, you could find a much more affordable monthly home loan rate.
Remember, you’ll need to also consider what loan is best for you in the long-term, especially if you’re locked into a long contract. But refinancing could be a very attractive option for Australians looking for an immediate way to save money.
How will it affect me if I’m looking to buy property?
Despite widespread panic about a massive hit to property prices earlier this year, the reality is that the market has remained steady and resilient throughout the turmoil^.
People are returning to work as restrictions ease and the government looks to move people off JobKeeper, which could even spark another property price rise.
For many Australians, the combination of low interest rates and a market that could rise, means now may be a very good time to buy.
So with interest rates still at record lows, it makes sense to get your finances in order right now.
Even if you’re not looking to buy immediately, getting your pre-approval in place means you know exactly how much you can borrow. Then you can monitor the market and pounce when the perfect home pops up – putting you ahead of other buyers who are taking a wait-and-see approach.
What financing options are available to me?
Starting the property hunt is exciting but stressful, so you can save time – and headaches – in the pre-approval process by using Rate Comparison.
Our home loan specialists compare the best interest rates from over 30 mortgage providers – both big and small – so we can find you the most affordable option for your needs.
Whether you’re looking to purchase a property, refinance your current home, consolidate debt, top up a loan or get the necessary funds for a renovation, the current low interest rates mean now is the perfect time to get your finances in order.
How can I make sure I’m not overpaying on my mortgage?
For most Australians, mortgage repayments are their largest monthly expense – so it pays to keep an eye on how much you’re paying your lender.
Sudden interest rate hikes or rate changes from your provider can turn a manageable home loan into a stressful situation.
The Australian Housing and Urban Research Institute* classifies mortgage stress – where you may struggle to pay your monthly home loan instalments – as 30% of your household income. If you’re near that number, it can be a very sensible idea to see if there’s a lender who could offer you a better deal.
One quick and easy way is to use a service like Rate Comparison that compares lenders, finds you better home loan options or switch over to a more appropriate lender.
The RBA’s latest interest rate announcement has put the ball firmly in your court. By comparing home loan rates and switching to a better deal, you could enjoy big savings on your monthly expenses – and that extra money can be put to much better use: living your best life. Get started today with Rate Comparison.
* Michael Yardney’s Property update, Latest property price forecasts revealed, August 14 2020
^AHURI, What is mortgage stress, September 2020.
This guide is opinion only and should not be taken as financial advice. Check with a financial professional before making any decisions.