How much is an RBA rate cut worth in dollars?

 

Banks already cutting rates ahead of RBA meeting next week.

 

Lenders have started a rate cutting war, even before the RBA has met. This week, Australia has a new record low variable headline home loan rate, before an expected RBA rate cut next Tuesday, 4^th June.

 

A new variable home loan headline rate of 3.29 per cent (comparison rate 3.34 per cent) from non-bank lender Mortgage House has set the scene for widespread rate cutting war across the mortgage market in June. ING, ANZ and others have also begun slashing variable and fixed home loan rates.

 

And one bank – Greater Bank – has smashed through the 3 per cent home loan rate mark with a one year fixed rate of 2.99 per cent (comparison rate 4.42 per cent).

 

“Banks and other lenders are already trimming fixed rate home loan rates, and variable rates as well, so we expect any moves in official rates from the RBA to quickly be adopted across the market by the majority of the retail lenders,” said Vadim Taube, InfoChoice chief executive officer.

 

“The big banks are sometimes slow to pass RBA rate cuts onto borrowers but following the Hayne Royal Commission and recent strong words from the treasurer Josh Frydenberg, we expect all four big banks to quickly fall into line with the RBA’s rate movements.”

 

“We are already seeing some of the smaller lenders moving their variable and fixed rates down, ahead of the RBA meeting.”

 

“The smaller lenders who are cutting loan rates now are clearly flagging a rate cutting arms race next week.”

 

The following tables shows the dollar reduction in monthly repayments that a 0.25 percentage point rate cut could deliver to borrowers of the big four banks. Data on the average reductions in repayments across the whole market of lenders is also available.

 

Current rates**
	Product Name	Rate % p.a.	Comparison rate % p.a.*	Monthly repayment amount (Based on 25 year loan period at $300,000)
Average BIG4		4.68
ANZ	ANZ Standard Variable Loan P&I with Breakfree Package	4.76	5.15	$1,712.08
CBA	Standard Variable Rate (with Wealth Package)	4.87	5.27	$1,731.12
NAB	NAB National Choice Package ($250,000 to $749,999) - P & I	4.51	4.90	$1,669.20
Westpac	Rocket Repay Home Loan (Premier Advantage Package) P & I	4.58	4.96	$1,681.15
After potential RBA cut	0.25
	Product Name	Rate		Monthly repayment amount (Based on 25 year loan period at $300,000)
Average BIG4		4.43
ANZ	ANZ Standard Variable Loan P&I with Breakfree Package	4.51		$1,669.20
CBA	Standard Variable Rate (with Wealth Package)	4.62		$1,688.00
NAB	NAB National Choice Package ($250,000 to $749,999) - P & I	4.26		$1,626.89
Westpac	Rocket Repay Home Loan (Premier Advantage Package) P & I	4.33		$1,638.68
		Difference		Monthly reduction in repayments
		Average BIG4		$42.69
		ANZ		$42.88
		CBA		$43.13
		NAB		$42.31
		Westpac		$42.47

 

 

 

“Savings rates are also already coming down, so savers might like to consider locking in a term deposit rate now before more cuts flow through from next week,” said Vadim Taube.

 

If the RBA chooses to leave rates unchanged, Vadim Taube said borrowers could organise a big rate cut for themselves, simply by comparing their own mortgage rate with the best rates now in the market.

 

“Many borrowers are now paying up to 4.5 per cent plus on their home loan.”

 

“By refinancing to a loan around 3.5 per cent a borrower would be give themselves the equivalent of four RBA rate cuts of 0.25 percentage points each.”

 

Vadim Taube is available for commentary around the RBA rate decision next week and the daily movements in savings and loan rates.

 

InfoChoice can provide all the data, commentary, research and market information you need for your story.

 

 

Please contact InfoChoice’s Jason Bryce on 0428 777 727 or Vadim Taube 0403 580 794 or email media.manager@infochoice.com.au.

 

 

*Comparison rate is based on a secured loan of $150,000 over the term of 25 years. WARNING: These comparison rates apply only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and costs savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan

 

** Notes: Rates are headline rates at the time of publishing, not comparison rates, fees not included. Rates based on owner-occupier, variable rate, principal and interest 25 year, $300,000 loan amount with a package.

 

Source: InfoChoice.com.au database

InfoChoice is a leading Australian comparison website for retail banking and personal finance products. We’ve been helping Aussies find great offers on everything from credit cards and home loans to insurance, energy and more for over 20 years. Our mission is to help consumers make an informed purchasing by bringing together the most comprehensive list of financial and insurance products on the market today. At InfoChoice, we strive to be:

• Comprehensive. We compare more than 3500 individual products from more than 160 providers within Australia to offer you the best value.

• Informative. We know how important it is for you to crunch the numbers before buying. Our calculators help you understand the cost of different products over the long term and show you the potential savings.

 

Jason Bryce

Journalist & Content Manager

 

m 0428 777 727

a Level 13, 10 Queens Road Melbourne VIC 3004

e Jason.bryce@infochoice.com.au

infochoice.com.au

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