Last weeks decision by the RBA to drop the cash rate for the first time in two and a half years will lower the anxiety levels and minimum debt repayments of many households in the lead up to Christmas.
The 0.25 percentage rate cut will mean $50 less in minimum monthly repayments on a 30-year $300,000 mortgage at 7%.
It also means at least one in three Australian mortgage holders will become more likely to look into refinancing, according to the recent Mortgage Choice 2011 Saving & Spending Insights Survey.
Almost half of Gen Y’s property owners will probably get their loan shopping basket out now, with 43% of the survey respondents saying they’d be more likely to refinance if rates drop. This compared to only 22% of Builders, 32% of Baby Boomers and 38% of Gen X.
Mortgage Choice spokesperson Kristy Sheppard said, “The cash rate has finally fallen after much pleading from Australian consumers and businesses. This should inject confidence-driven stimulus into the economy.”
“Lenders are bound to use this opportunity to put themselves in the best possible position to attract new customers and keep their existing customers onboard.
“Borrowers should take the reins of their home loan and scout around for rate discounts, switching incentives and other offers, work with a mortgage broker to find a great product well tailored to their current rather than past needs, then see if the broker can negotiate them into a sweeter situation.
“It’s amazing what a difference a drop in a home loan’s rate and fees can make to its overall cost. You might be able to save tens of thousands of dollars in interest and cut years off your loan term.
“Plenty of Australians spend time shopping around to save a few dollars on travel, clothing and other goods… why not take advantage of today’s competitive home loan market by looking for new deals that could make a much bigger difference to your hip pocket?
“I hope the 64% of our survey respondents who weren’t more likely to consider refinancing if rates dropped have at least weighed up their home loan options recently because the market’s constantly changing.
That is particularly important advice for the 22% of that group who said they simply can’t be bothered looking into it. Laziness could be much more costly than they realise.”
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