Lenders are cutting home loan rates ahead of expected RBA interest rate cut

ABC NEWS (Australia)

If you are thinking about refinancing your home loan, now might be a good time. Lenders are cutting fixed and variable rates ahead of anticipated interest rate cuts by the reserve bank which meets next week.

Transcript

00:00Mollick Naik's mortgage repayments are about to increase by more than 50% when he rolls

00:08off his fixed rate deal.

00:10Jumping onto the ranges of 6% is uncertain and it makes you feel nervous.

00:18Luckily for Mollick, competition between lenders is heating up, with more than 20 cutting their

00:23fixed rates in the last month, and some lenders cutting variable rates too.

00:29We are now seeing fixed rates in the fours, there are 35 lenders on our database that

00:35are offering at least one variable rate under 5.75%.

00:39The official interest rate is currently sitting at 4.1%, and most economists are forecasting

00:45the Reserve Bank will cut interest rates by a quarter of a percentage point next week,

00:50while NAB is predicting a double rate cut.

00:53If you look at the threat from the global trade situation, the downtrend in inflation,

00:58weak consumer spending, they point to rate cuts.

01:01A homeowner with a $750,000 mortgage would save more than $100 a month if the RBA reduces

01:10interest rates by a quarter of a percentage point, provided the lender passes it on.

01:15CanStar's Sally Tindall has run the numbers on whether a fixed or variable rate is cheaper.

01:21We looked at an owner-occupier with a $600,000 debt, looking at the lowest two-year fixed rate

01:27in the market versus the lowest variable rate.

01:31If CBA's forecast materialises and there's three more cash rate cuts, it is a lineball call

01:38over the next two years about which option comes out cheaper.

01:43Food for thought for anyone with a mortgage.

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