Save
Winners and losers from the cash rate drop
The Reserve Bank of Australia has cut rates to a new historic low, which is set to have a knock-on impact to Australia’s mortgage holders.
Winners and losers from the cash rate drop
The Reserve Bank of Australia has cut rates to a new historic low, which is set to have a knock-on impact to Australia’s mortgage holders.
Winners
Variable home loan holders
Variable mortgagees are the big winners from yesterday’s announcement on the assumption their ADI has passed on a portion of the rate cut. So far, all the major lenders have passed on the cut in their variable offerings.
“The Reserve Bank cash rate cut is more good news for home loan borrowers delivering their second rate cut in two months,” said Canstar’s financial expert, Steve Mickenbecker.
Lenders – if they don’t pass on the full rate cut
Research conducted by Mozo suggests that the big four banks’ tactic of holding back some of the RBA’s official rate cuts, which they have done in recent years, has pocketed them $125 million per month and, collectively, about $3.86 billion since 2016.
Losers
Savers
Retirees, who typically have a higher allocation to cash savings than savers in accumulation mode, are the big losers with the rates continuing to fall.
Mr Mickenbecker believes savers will fall even further behind with yesterday’s announcement.
“With a second cut to the cash rate in as many months, borrowers should not be banking on another 0.25 percentage point cut to their home loan as lenders will likely struggle to pass on that much,” said Mickenbecker.
According to Finder’s research, this will have an impact on $526 billion in savings accounts across Australia.
Finder suggests that if both rate cuts have been passed, savers could lose a staggering $2.6 billion in interest over the course of a year.
Banks
The cut to the official cash rate is not good for banks that require savings to loan out to consumers.
As Mr Mickenbecker states, “The problem the banks face this time around is that savings rates paid by many are at rock bottom. Most online savings account holders are only receiving a base rate of around 0.30 per cent. It will be hard for the banks to cut those rates further.”
The need for a second cut
Graham Cooke, insights manager at Finder, said last month’s cut – the first change to the cash rate in almost three years – was perhaps too small to make the desired impact.
“The objective is to lower unemployment, boost wage growth and push inflation back to target. It’s clear that one cut isn’t enough.
“Frankly, two cuts might not be either, but it’s a step in the right direction and it’s great news for home owners. It’s two down and maybe one or two more to go.”
This email address is being protected from spambots. You need JavaScript enabled to view it.
About the author
About the author
Expenses
Morrison backs big pharma, turns back to developing countries
Big pharma is currently fighting to maintain intellectual property protections over COVID-19 vaccines, with Australia refusing to act despite having no pharmaceutical companies. ...Read more
Expenses
Half-price flight scheme launches today
Aussies are being offered half-price flights as the government looks to spur domestic travel to regions it has defined as key to economic recovery. ...Read more
Expenses
Insurance prices rise despite payout falls
The COVID-19 pandemic has seen insurer payouts fall by $500 million, but Australian consumers are continuing to pay more, the consumer watchdog has revealed. ...Read more
Expenses
CBA cops civil proceedings for overcharged interest
ASIC has commenced civil penalty proceedings in the Federal Court against the Commonwealth Bank over the bank charging an interest rate on business overdraft accounts that was substantially higher tha...Read more
Expenses
What are the top 10 most expensive cities in the world?
Logistical issues and currency fluctuations caused by the COVID-19 pandemic has seen the most expensive cities in the world drastically change, new research has revealed. ...Read more
Expenses
Sydney adviser pleads guilty to misappropriating $2.9m
A Sydney financial adviser has pleaded guilty to misappropriating $2.9 million in his clients’ funds. ...Read more
Expenses
Telstra set to refund 10,000 customers
Ten thousand past and present Telstra customers are entitled to a refund due to being overcharged a total of $2.5 million. ...Read more
Expenses
iSelect in hot water for energy plan comparisons
Comparison tool iSelect has been ordered to pay $8.5 million in penalties for making false and misleading representations about its electricity comparison service. ...Read more
The Olympic effect on property and equity investors; COVID-19 Disaster Payments and super
Listen now
Do lockdowns boost property prices? Are short-sellers levelling the playing field? Did you lodge your tax returns early?
Listen now
Will lockdowns halt the housing boom? Is the metaverse taking over? And the cons of lodging your tax returns early
Listen now
Are you being priced out of the market? Have you got the Tuesday blues? And are you ready for the upcoming super changes?
Listen now
Expenses
Morrison backs big pharma, turns back to developing countries
Big pharma is currently fighting to maintain intellectual property protections over COVID-19 vaccines, with Australia refusing to act despite having no pharmaceutical companies. ...Read more
Expenses
Half-price flight scheme launches today
Aussies are being offered half-price flights as the government looks to spur domestic travel to regions it has defined as key to economic recovery. ...Read more
Expenses
Insurance prices rise despite payout falls
The COVID-19 pandemic has seen insurer payouts fall by $500 million, but Australian consumers are continuing to pay more, the consumer watchdog has revealed. ...Read more
Expenses
CBA cops civil proceedings for overcharged interest
ASIC has commenced civil penalty proceedings in the Federal Court against the Commonwealth Bank over the bank charging an interest rate on business overdraft accounts that was substantially higher tha...Read more
Expenses
What are the top 10 most expensive cities in the world?
Logistical issues and currency fluctuations caused by the COVID-19 pandemic has seen the most expensive cities in the world drastically change, new research has revealed. ...Read more
Expenses
Sydney adviser pleads guilty to misappropriating $2.9m
A Sydney financial adviser has pleaded guilty to misappropriating $2.9 million in his clients’ funds. ...Read more
Expenses
Telstra set to refund 10,000 customers
Ten thousand past and present Telstra customers are entitled to a refund due to being overcharged a total of $2.5 million. ...Read more
Expenses
iSelect in hot water for energy plan comparisons
Comparison tool iSelect has been ordered to pay $8.5 million in penalties for making false and misleading representations about its electricity comparison service. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
