Over the last few days, your inbox and news feeds will have been inundated with the news that the Reserve Bank cut interest rates by 0.25% on 1stOctober 2019 to boost the economy. But, how does this affect you?

Looking to buy property?

The interest rate cut means that if you are looking for a mortgage, the interest rate you pay on the home loan will now be lower. However, be aware that mortgage lenders and banks will only pass on a partial cut, and although in the short term the home loan will be cheaper, it is important not to stretch yourself and consider affordability if the interest rates rise again.

The Government is putting pressure on the banks to pass on in full the latest cut in official interest rates, however so far, they are resisting.

Are you already a home owner?

The interest rate cut ‘may’ boost property prices. Certainly, property investors will be taking advantage of the record low rate, and with cheaper home loans, buyers may be more confident, resulting in an increase in demand for homes. Also, if you are on a variable mortgage, or have a part fixed, part variable mortgage, your monthly mortgage payment will be reduced.

Treasurer Josh Frydenberg has told mortgage holders to quit the big four banks to get a better home loan interest rate.

“People need to shop around – the only way the banks will get the message is through the voices of their customers and through their customers voting with their feet,” Mr Frydenberg told Sky News on Thursday.

If you are unhappy with your current lender, and have at least 20% equity, now is the time to move away from one of the big four banks. Many of the smaller lenders are very competitive and can offer you better rates.

To assist with any refinancing and/or to get the best possible deal, give our in-house mortgage broker Reece a call on 0403 655 533

Are you a saver?

Unfortunately, an interest rate reduction is bad news for savers. If you don’t think you are getting the best interest rate on your current savings account, then shop around. There are many comparison websites to see what is being offered, just be careful of any fees associated with moving your money.

If you would like to make an appointment with Reece, please get in touch by emailing Chloe at admin@taxproaustralia.com.au or call 08 9240 7629