RBA Rate Cuts; what it means for you.

The Reserve Bank has now passed two rate cuts in this calendar year reducing the cash rate cumulatively by 0.5% to 3.85%. This is the first time that the rate has been below 4% since May 2023. With the major banks passing on these cuts in full, this has brought some welcome reprieve to mortgage holders across the country.

But what does this change mean for you?

1.     Variable rate holders

For those among you on variable rates, there are two options. The first is to do nothing and continue to make the same repayments that you are already paying. With the recent rate drop, your repayments will go further towards reducing your loan balance, making this a valuable opportunity to get ahead on your loan if your budget allows.

The second option is to reduce your repayments, keeping the length of the loan the same. A helpful way to free up some extra cash in your monthly budget.

The major banks generally take two weeks to pass on the RBA’s rate cuts so expect these changes to be coming into effect in the next week.

2.     Fix rate holders

If you have a fixed rate, you will not be getting the instant benefit from the reduced rates. However, there are still possibilities for you to get a better rate. You could look to refinance your fixed rate and see if changing your current loan arrangement is a good option.  Indeed, we recommend all mortgage holders to be constantly assessing the health of their loan. This is something that we at IFA do automatically for you on a yearly basis, but you can give us a call if you’d like a review sooner.  

3.     New Purchases

If you are looking to buy a new property, the reduced rates could assist in making this a reality. With the lower rates, your borrowing power can increase making a broader range of properties available and achievable.

Regardless of what situation you are in, it is always a good idea to get in touch with your IFA mortgage broker or the wider IFA team, and with rates changing, it’s never been a better time.

Call us today on (02) 9369 1520.‍