Mortgage rates see another cut – is it all too good to be true?
25/05/2016 Loreen Dyer, Loans Coordinator
Following the 3 May 2016 Federal Budget, the Reserve Bank of Australia (RBA) has dropped the interest rate to a new historic low.
Within minutes of the RBA announcing its cash rate cut, the major banks revealed they would pass on the reduction to their customers. Most in full and some at a lesser discount. The new rates will take effect from mid to end May 2016.
What this means for you is that, as a result of the reduction, you can save approximately $47 a month on a $300,000 mortgage. On a $550,000 mortgage the saving would be approximately $114 per month. However, if home owners were to ignore the rate cut and retain their repayments, the average homeowner would over the term of their loan, save approximately $10- $11K in interest and pay their mortgage off a year or so sooner.
But could one expect these rates to remain stagnant for a while - if not a further reduction – is a different question!
Too good to be true - fixed rates have dropped to an all-time low
One of the major banks said alongside the cut in variable mortgage rates, it would cut two-year fixed interest rates for owner-occupiers to 3.75 per cent and rates on four-month term deposits would increase from 2 per cent to 3 per cent. The other major banks are following closely behind at 3.99 per cent and 4.19 per cent packaged for owner occupier properties and 4.44 per cent for investment. Some other financers have dropped their two year fixed interest rate to as low as 3.98%.
It can only be a good sign for borrowers who can now lock in a low rate over the coming years to facilitate better budget controls on household expenditure, with predictable costs on their home loans.
Non-Resident Borrowers / Temporary Visa Holders
Last week CBA announced its ban on lending to non-resident property investors and temporary visa holders. Following in its footsteps are Westpac Group, including St George Bank, Bank of Melbourne and BankSA.
The Westpac Group have also reduced the loan-to-value-ratio for applications where foreign income has been included, from 80 per cent to a maximum 70 per cent of the bank valuation of the property from April 26 2016 (see FIRB website).
While the funding markets remain volatile, the decision to lower interest rates is pitched at ensuring banks maintain the right balance between growth, risks and margins over the longer term, whilst also considering the needs of their borrowers.
If you would like to find out more about current mortgage lending rates and whether you’re getting the best rate from your lender, please give us a call on 1300 726 082 and ask to speak with a mortgages and finance adviser today.
2027 – The age of the renter
19/10/2017 James Hickey, Property Portfolio Manager
With property prices on the rise, more and more people are turning to renting as their preferred living situation. It’s with this changing landscape in mind property portfolio manager James Hickey casts his eyes to 2027; a year many believe will dawn the age of the renter.
Game of Thrones and seven lessons in economics and finance
28/08/2017 Myra Talha, Corporate Accountant
As Game of Thrones has captured the imaginations of readers and television enthusiasts alike, Corporate Accountant Myra Talha explains that there are real life economic lessons that can be learnt from this fantastical work of fiction. Beware Game of Thrones fans – this post is dark and full of spoilers.
Are you scared of the future?
July 2017 eBulletin Introduction
10/07/2017 John Hopkins, Executive Chairman
With all that is happening in the world at the moment, it can be easy to be consumed by fear. But in his recent eBulletin introduction, John Hopkins argues that we must not let fear hold us back from taking actions to secure our financial future.