What the RBA’s rate cut means for you

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November 04 2020
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The RBA has slashed the official rate cut to a new record low of 0.10 per cent, but what does that mean for you?

The research shows mortgage-holders with a $400,000 loan will now save $33 dollars a month or $391 a year.

The larger the loan, the bigger the savings – with a mortgage-holder on a $500,000 loan saving $41, a $750,000 loan saving $61 and Australians owing $1,000,000 now saving $82 a month.

Research director Sally Tindall said the changes might seem minimal but could help struggling Aussies.

“A rate cut could save the average home loan customer $33 per month, which may seem like a small change to some people, but for families struggling to make ends meet, it could be the lifeline they need,” she said.

Ms Tindall said the changing rate will put immense pressure on the banks to pass on the savings to their variable home loan customers.

“At this stage, the big banks appear to be playing a game of chicken with no announcements as to whether they will pass it on to their customers.

“Call your bank, find out what they intend to do. If they don’t pass on a full cut, shop around in what remains an extremely competitive market,” she said.

Impact to savings rates

While mortgage-holders are the big winners, savers once again lose with a recent analysis showing the average ongoing savings rate is now 0.52 per cent.

This could fall to below 0.40 per cent on the back of today’s rate cut.

“The outlook for savers has just turned from gloomy to bleak, with another RBA cut today and no prospect of a rate rise for at least the next three years.

“Already a handful of banks are offering no interest on some savings accounts. While the big banks will desperately want to avoid cutting their base rates down to 0 per cent, it can’t be ruled out,” Ms Tindall concluded.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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