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RBA cuts the cash rate to a record low - Finder

Finance Markets / Mortgages

Jul 03 2019

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It’s been less than 24 hours since the Reserve Bank of Australia cut the cash rate to a new record-low of 1.00% – its second consecutive cut in as many months – and already there’s been a rush of activity from lenders, including the Big Four. 

ANZ announced it will pass on the rate cut in full (25 basis points) on its standard variable rate, while Westpac announced a reduction of 20 basis points and both CBA and NAB will ease by 19 basis points. None of the Big Four have passed on both rate cuts in full.

Please see below for Finder research and thoughts from Graham Cooke, insights manager at Finder.

“The latest cut has led to a surge in Australians seeking to get out of their fixed loans, with a staggering 408% uplift in those seeking more information about fixed rate home loan break costs on Finder compared to this period a week ago. Break costs, or exit fees, are calculated by the lender taking into account the rate you fixed, the current market rate, the loan balance and how long you’ve fixed for.  
“Furthermore, Aussies are searching for better value in this record low rate market, with a 313% uptick in variable rate home loans over the same period.
“It’s time to shine for smaller lenders. In a post-Royal Commission market, some borrowers might well be open to breaking up with the Big Four. 
“Last month a couple of lenders broke the mould with sub-3% fixed loans. This month we’re already seeing this extend in the variable home loan space with Reduce Home Loans leading the pack with a never-before-seen 2.89% rate. 
“The question on everyone’s lips now is, how low will lenders go? This latest rate cut shows smaller lenders are setting the benchmark with rates that start with a ‘2'. 
“There’s a 46 basis points difference between the lowest rate in the market and the lowest rate from the Big Four, which represents a significant $35,000 saving over a 30 year loan on the average mortgage.” 

By the numbers: 

The new standard variable rate for the Big Four is 4.94%
The new average lowest variable rate for the Big Four is 3.42%
The lowest variable rate on market is 2.89% (Reduce Home Loans)
The lowest variable rate of the Big Four is 3.35% (NAB, CBA)

SOURCE: Finder

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