You may believe that now is the best time to talk to your mortgage brokers in Rockingham after the Reserve Bank reduced the cash rate by a further 25 basis points recently, which settles the interest rate at 2.75%;the lowest seen in 53 years.
Some financial advisers had expected the reduction to appear but as many suggested that it would never happen but it has. Whether this is the right time for you to go out and choose a home loan, as rates may never be this low again, is at least worth a discussion with whoever you usually deal with for home loans in Rockingham, just to see what is available.
Not All Lenders Agree
The majority of banks and home loan lenders were relatively quick in passing on the 25 basis points in full but each of the banks appears to have applied separate conditions to their new loan rates.
The Greater Building Society passed on 0.3% to their borrowers while ANZ used the opportunity to go to 0.27%. In real terms this means that borrowers who have an outstanding $300,000 variable rate mortgage, will be paying between $50 and $60 per month less from now on.
Making the Most of a Bank’s Margins
Not all deals look as good as can be expected after such a low cash rate has been produced because lenders apply an amount above the cash rate to set their own variable rate with the average standard variable rate still considerably higher than the 5.75% achieved in 2009. The difference between the cash rate and the standard variable rate on offer is known as the bank’s margin and some banks have used this opportunity to increase the margin and not pass the full reserve bank’s cut to all mortgagees.
After the rate cut, 6.14% appears to be the benchmark for the majority of standard variable rates. For many lenders, the margin above the cash rate is the highest that is ever been witnessed.
The standard variable rate is significantly different between lenders with the lowest rate seeing some people paying at 4.75% while others will be paying as much as 6.24%.
Three lenders passed on less than the reduction in the cash rate, with Community First reducing their rate by 0.22% to 6.12%, the Police Bank down by 0 .2% to 5.84% and while loans.com.au reduced by just 0.24%, their standard variable rate is now 4.75%.
Despite a vast array of different standard variable mortgages available, even after the reserve bank’s cash rate reduction, many banks and other lenders are offering a range of discounts to encourage people to choose them as their mortgage provider and vary according to the size of your deposit.
Fortunately, your mortgage brokers in Baldivis will be able to compare all of the deals available to be able to let you know which discounts offer the standard rate you will be able to apply for.