What does the RBA rate cut mean for me?

After a number of earlier monthly rate cuts, mid-March saw the Reserve Bank of Australia (RBA) take the unprecedented step of cutting the nation’s official cash rate by 0.25% to a never-before-seen low of 0.25%.

Why the rate cut?

At the beginning of 2020, Australia had enjoyed an interrupted 28-year run of economic growth. More than just a pretty impressive achievement, it was also a record in the
developed world over this period.

However, the unfolding COVID-19 outbreak, and the responses of government’s globally to contain the spread of the virus, are set to impact the international economy.

In the meantime however, the latest rate cut is designed to support consumers, small businesses and the broader economy get through a challenging period.

How will you be impacted?

The effect of today’s super-low interest rates will vary depending on your situation.

If you have a variable rate home loan

Lenders have responded in a variety of ways to the RBA’s mid-March rate cut. Some have lowered their variable rates, others haven’t.

It makes now the time to speak with your Aussie Broker to know if you’re paying more than necessary on your home loan.

Locking into a fixed rate loan may bring certainty to your household budget. If you’re not comfortable about fixing 100 percent of your home loan, your Aussie broker can explain the pros and cons of splitting between variable and fixed rates.

If you’re coming to end of a fixed rate loan

Some lenders have recently slashed their fixed term rates. That makes it critical to speak with your Aussie Broker to consider your options so that you’re ready to make an informed choice when your fixed rate term expires.

If you’re a first home buyer

First home owners have a wealth of support available to take advantage of today’s record-low rates.

The new First Home Loan Deposit Scheme (FHLDS) lets first home owners get into the market with a deposit of just 5% and no Lenders Mortgage Insurance. Even better, buying a home through the FHLDS won’t stop you being eligible for the First Home Owner Grant.

The FHLDS is only available to 10,000 first home buyers each financial year. So even if you’re not ready to buy, it’s smart to speak to your Aussie Broker to know what you can do to prepare.

If you’re thinking of upgrading

Home values had been growing steadily almost across the nation through to February, and while it’s always hard to predict how values will move in the next few months, auction sales were still going strong in March.

Housing has performed relatively well against previous economic shocks, with way less volatility than sharemarkets, and CoreLogic notes that vendors may not see the need to lower their property’s sale price.

Focus on what you can control

In uncertain times it’s important to focus on those things you can control – like how much you’re paying on your home loan, and working towards your personal property goals.

Check in with your Aussie Broker to be sure you’re reaping the rewards of lower interest rates, and have peace of mind knowing that you’re getting a competitive deal on the loan that’s suited to your situation.

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