HOME LOAN MARKET UPDATE | MARCH 2020
We predicted last month that the Reserve Bank of Australia (RBA) was likely to lower the cash rate at some stage this year but were surprised they did so this month. This takes the current cash rate to an unprecedented 0.50% and now another rate cut is imminent. The economic impacts of the coronavirus are now very significant with the share market down over 30% and with many forecasting further negative impacts. It is still too early to tell what the impacts are likely to be on the local property market which remained strong over the weekend with clearance rates of 68%.
With all lenders passing on the full rate cut of 0.25%, we are now seeing variable rate home loans as low as 2.70% and investment loans at 2.99%.
Have you fixed?
If you have fixed your home loan over 6-12 months ago it is likely that your interest rate could be over 1% higher than the current variable rates. What we recommend is calling your lender and finding out what the break cost fees are if you were to refinance your loan. We would then weigh these break costs up with the overall costs savings and see if it would be worthwhile switching your loan to a more competitive offering. The current interest rates were impossible to predict 12 months ago so it would not be uncommon for you to have a fixed rate loan at the moment.
Finally I would like to wish you and your family all the best over this difficult period. It is now doubt a very stressful time from a health point of view which is the most important thing to consider as well as financially, where so many people are being affected in their work.