Local borrowers will save thousands on rate cut

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First homebuyer Ashley Millar, 25, was pre-approved for a variable rate home loan on Tuesday with Suncorp.

WITH the local property market buzzing after the Reserve Bank’s historic interest rate cut, attention has turned to lenders and how much they are passing on to borrowers.

The cash rate which was cut by 25 basis points to 1.25 per cent has not been as low since it was first regulated in 1990.

Homeowners with a fixed interest rate won’t see much of a change, but those with a variable loan in Townsville are expected to save $50 a month on average if their lender passes on the full 0.25 per cent rate cut.

A new report by ANZ and CoreLogic has also revealed, the housing market in Townsville is more affordable for those borrowing or saving for a deposit than those renting.

Homeowners in the region could be saving 3 per cent more of their income to service a mortgage than if they were renting, with a 20 per cent deposit for property in the region taking 5.2 years to save on average.

READ MORE:

How homeowners can take action on RBA cut

Buyers high on interest rate low

Local first homebuyer, Ashley Millar, was pre-approved for a variable rate home loan on Tuesday with Suncorp, which will reduce its rates by 0.20 percentage points.

“I decided to purchase the house because it’s a great time to buy in Townsville at the moment; prices are very low and I found a really good deal,” Ms Millar said.

“When I was taking out a loan, I decided to go with the variable rate because I had heard that a rate cut might be coming.”

“I will be going to see my bank (Suncorp) next week to find out exactly how much this will reduce my repayments by.”

Principal at Huggable Home Loans Dave Lamari said the average homeowner in Townsville would save about $18,000 on a 30 year loan if their lender passes on the full rate cut.

Dave Lamari and his mascot the Teddy Bear outside Huggable Home Loans.

“Obviously it’s going to depend on the amount, but for a mortgage of around $300,000 or $350,000, if the lender passes on the full quarter — borrowers will generally be saving about $50 a month or $600 a year,” Mr Lamari said.

Of the big four banks, CBA and NAB have both passed on the rate cut in full, but Westpac has only passed on 0.20 per cent and ANZ only 0.18 per cent.

Treasurer Josh Frydenberg said the decision by the two banks, not to pass on the full amount presented an opportunity for customers to shop around.

Federal Treasurer Josh Frydenberg speaks to the media during a press conference in Melbourne, Tuesday, June 4, 2019. The Treasurer called on all banks to pass on the full interest rate cut handed down by the RBA. (AAP Image/Stefan Postles)

“I think their customers have been let down by this decision,” Mr Frydenberg said.

“We know that people can move between banks and seek a better deal as well, and I’d encourage them to always look for the best possible deal for themselves and for their families and their businesses.”

But Mr Lamari warned that with more rate cuts expected, its important borrowers don’t make hasty changes.

“People have to be careful not to make rash decisions, I’ve had clients call me who are with ANZ and they’re ropeable … but the reserve bank may drop rates again.

“Perhaps next time ANZ and Westpac will pass on the full quarter and CBA and NAB may decide to pass on none — it might sound like a great idea to move now, but it might not be so amazing later.“

Borrowers are proving fast to take advantage of low-rate loans with traffic to home loan deals on Finder jumping by a staggering 654 per cent in less than 48 hours after the RBA announcement on Tuesday.

Interest in variable rates on Finder also grew by 564 per cent, and there’s been a 369 per cent spike in those looking to refinance.

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