All four major banks, CBA, Westpac, NAB and ANZ, have stepped up to the plate, announcing they will pass on the RBA’s 0.25 percentage point cut to variable mortgage customers.
While CBA, NAB and ANZ home loan rate cuts will take effect on May 30, Westpac’s home loan changes will kick in on June 3.
Canstar.com.au’s data insights director, Sally Tindall said Australians with variable home loans can breathe a sigh of relief knowing a second rate cut of the year is here.
“While two standard RBA cuts seems tiny compared to 13 hikes over the past three years, it’s a welcome step down from a mountain of pressure and a sign the worst of the cost-of-living crisis is in the rearview mirror,” she said.
“All four big banks have announced they’ll be passing the cut on in full, which is terrific news. The banks know just how tough it’s been for many of their customers and they’ve made the right decision today.
“However, it’s important to realise that some banks won’t lower your direct debit automatically even if you are paying the minimum, including CBA, NAB and ANZ, so if you do need this extra cash in your bank account, rather than your mortgage, make sure you let your bank know.
“While for many borrowers this extra cash will go straight to paying the bills, for those who have managed to keep their head above water, today’s RBA decision also represents a golden opportunity.
“If you’ve got a $600,000 loan with 25 years to go, your minimum monthly repayments are likely to fall by around $91. However, if you’ve managed to keep up with higher repayments through the rate hikes, consider keeping them the same.
“If we see a total of four cuts this year, including the ones in February and May, and someone with a $600,000 mortgage with 25 years remaining keeps their monthly repayments exactly the same, they could stand to kick their mortgage to the curb four years early and shave more than $89,000 from the total interest bill, provided they keep up these extra repayments for the remainder of their loan.
“But don’t stop there. Canstar estimates that once lenders pass on this cash rate cut there could be at least 30 lenders offering variable rates under 5.50 per cent. If your new mortgage rate isn’t at this mark as an owner-occupier, it could be time to make the switch.”
The RBA announced it was cutting the official cash rate to 3.85 per cent earlier today.
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