In March this year, the Reserve Bank of Australia twice cut its official cash rate to reduce it to a new record low of 0.25 per cent.
This is as low as official rates are likely to go in Australia. To signal its intention to maintain the current rate and not move towards negative rates as many other countries have done, the RBA pledged to fix three-year bond yields at 0.25 per cent.
As the world continues to deal with the health and economic impacts of the COVID-19 pandemic, rock bottom interest rates have also gone global.
While official rates are looking to stay at their present level in Australia, there remains a huge gap between the top and bottom in home loan rates currently on offer.
Canstar figures show the lowest variable rate of 2.19 per cent is 1.28 percentage points below the average variable rate of 3.47 per cent. This means the difference in repayments between the lowest rate and the average rate is about $272 a month on a $400,000 loan over 30 years, or more than $3200 a year.
Many lenders are already offering both fixed and variable rate deals in the low two per cent range, but these could fall further in the coming months with one lender in Tasmania already offering a fixed rate of 1.99 per cent.
Some experts believe a mortgage war is brewing as lenders compete vigorously for your business over the coming months and years.
Now is the time to be putting some pressure on your lender about getting a better deal on your home loan.
There would be many mortgage holders who are still paying off loans with an interest rate in the high three per cent range, and perhaps even higher. But borrowers have never had a better opportunity to refinance.
If you think you can do a lot better with your interest rate, contact a mortgage broker to make sure you are getting the best terms possible and, most importantly, save money.