On August 2nd 2016 the Reserve Bank of Australia cut the cash rate by 0.25% to 1.5% - an all-time low.
The country's major banks responded and passed on the cut, announcing they will be making the following reductions to their owner-occupied standard variable rate home loan interst rates:
- ANZ: -0.12% to 5.25%;
- CBA: -0.13% to 5.22%;
- NAB: - 0.10% to 5.25%; and,
- WESTPAC: -0.14% to 5.29%.
There has been National outrage over the major bank's failure to pass on more of the rate cut. Prime Minister Malcolm Turnbull commented, saying that the major's "owe it to the Australian people and their customers to explain fully and comprehensively why they have not passed on the full rate cut".
Reasoning aside, the major banks are looking to see huge perks from their keep of the rate cut. RateCity estimated that CBA would collect an extra $475 million a year in interest, Westpac $350 million, NAB $300 million, and ANZ $265 million, when compared to having passed on the full -0.25%.
The average standard variable rate on an owner-occupier loan of $300,000 (30-year term) is 4.46%. Still, if you have a mortgage and have a moderately low loan to value ratio you could expect to find a standard variable rate starting with a 3.
Many smaller non-bank lenders are offering attractive interest rates for owner-occupiers, AMP Capital chief economist Shane Oliver expects many smaller lenders to pass on the full rate cut to try and get a grab on new customers. So far Bank Australia is the only smaller lender to announce that it will be passing on the full rate cut to its customers which will see their standard variable rate fall to 4.74%.
If you have a home loan that you have not reviewed for over 18-24 months it is more important than ever that you revisit it. At no cost to you our brokers will assist you and review your current financial solution. They can asses whether you could be:
- accessing a lower interest rate;
- saving money on your monthly repayments; or even,
- utilizing an alterntive solution to access certain features.
We work for you, not the banks, and we are determined to ensure that iconic customers benefit from the cash rate cut wherever they are able to.
Thanks for reading guys!
iconic home loans
Finance availability is subject to applicant satisfying lenders qualifying criteria and all approvals are at the discretion of the lender. The information provided is general advice only and your personal circumstances have not been taken in to consideration, you should seek independent advice before making any decisions in relation to your personal finances. All interest rate changes announced at August 2016 and subject to effective from date stipulated by the lender.