There are healthy, low home loan rates ready and waiting

Historically low home loan rates? Might be time for a check in on your home loan and the sharp deals that are available.

For current mortgage holders, the cut could you save money every month.

THE Reserve Bank’s interest rate cut saw a quick reaction from one of the Big Four banks.

Last Tuesday the RBA announced a cash rate cut aimed at supporting the Australian economy out of the COVID-19 induced recession.

By Wednesday, the Commonwealth Bank of Australia had announced — among a number of new rates — an owner-occupier four-year fixed rate at 1.99 per cent, the lowest fixed rate the bank has offered in its 108 year history.

Derwent Finance senior mortgage broker Emmanuel Marios said the message from the RBA and Governor Philip Lowe was that the record low 0.1 per cent cash rate was part of a package of measures to support job creation and economic recovery from the COVID-19 pandemic.

“How can this help people? For current mortgage holders, the cut could you save money every month if your bank passes the full rate cut,” he said.

“It’s also the sixth RBA rate cut since June 2019, which means if you haven’t had a home loan health check in the past year, there’s a good chance you’re paying more interest than you need to on your home loan each month.”

Derwent Finance founder and mortgage broker Emmanuel Marios.

Head of research at CoreLogic, Tim Lawless described the cut to the cash rate target as “an unprecedented low”.

“If passed on by the banks, which is highly likely, we will see mortgage rates fall further from their already record lows,” he said.

“Historically cuts to interest rates have fuelled housing market activity and generally aligned with upwards pressure on dwelling prices.

“With the trend in housing values already rising around most areas of the country, there is a good chance lower rates could see momentum building across the nation’s most valuable asset class.”

Real Estate Institute of Australia president Adrian Kelly.

The Real Estate Institute of Australia expects the RBA’s cut will improve housing affordability.

REIA president Adrian Kelly said the REIA’s Housing Affordability Report for June showed that the proportion of income required to meet loan repayments decreasing.

“The interest rate cut, if passed on, would see the proportion of income required to meet loan repayments decreasing to 33.9 per cent,” he said.

“The personal income tax cuts announced in Budget in October will further improve affordability for many home buyers.”

Archistar chief economist Dr Andrew Wilson believes the cut will provide more fuel for housing markets.

He said it was clearly good news for mortgage holders and it will provide the economy with increased consumer spending potential.

“Likewise, lower rates are good news for businesses with lower lending costs acting to offset subdued activity and also encourage investment,” he said.

“Interest rate cuts are a positive for housing markets as they increase affordability with home buyers able to pay more with a given income.

“And the potential for further cuts is now clearly constrained as we move towards zero — a level which the RBA bank is surely unlikely to move to. So, enjoy it while it lasts.”

Originally published as There are healthy, low home loan rates ready and waiting