With home loan interest rates continuing to fall there are some real benefits to be found. You could find yourself saving money with your current lender, pursuing a cheaper lender, or even entering the purchase market in a much cheaper fashion than you previously thought.
Posted in: Insights
On two occasions in March the RBA dropped the Cash Rate to a new record low of 0.25%. It also stated that it will provide other measures to assist the economy and keep rates at that record low for at least the next three years.
To date, the Federal Government has committed around $320 billion to support the economy and workers through the coronavirus pandemic - with a promise of more to come if needed. This money is borrowed money and will mean the short term budget will be a sea of red ink at the same time as tax receipts fall to support repayment of the debt.
But, if interest rates remain low, the Government will benefit as well, as it means the interest charge on that mountain of debt will be more manageable. So the Government also has a clear vested interest in ensuring interest rates remain low over the longer term.
That should bring a level of comfort to households as they seek to manage their own household debt. Just remember, if you currently have a loan, it does not automatically mean that your Bank is giving you their lowest rates, or that you can’t get a better rate elsewhere. The interest rate you are paying on your loan should be a high priority to help you save money and keep required minimum monthly repayments as low as possible. Check in with one of our experienced Brokers, because it could pay off to simply review your current loan, or look for a new one.
Additionally, for those looking to buy a home, or upgrade from their existing home, there should be a level of comfort that interest rates should remain low. This may mean the proposed home loan repayments have become more comfortable in the price range you are looking at, or your budget now looks more manageable for a property in a slightly higher price bracket.
There may even be opportunities to capitalise on a market with less buyers, for those who are lucky enough to remain steady in their financial position. The market is definitely changing with social distancing measures restricting access to properties and the ability to gather at auction. Real estate agents and vendors are adapting to our current environment and the ability to purchase a property still remains in tact, albeit a little different to before. Our agile Brokers are here to help you navigate the new purchase landscape, to get you pre-approved, and to double check your current approvals.
*The information provided in this article is general in nature and does not take into account your personal circumstances. Since everyone's personal situation is different, this article should not be taken as advice. We recommend you seek individual advice with a mortgage broker.