The Reserve Bank of Australia (RBA) reduced the Cash Rate by 0.25%. The Cash Rate now sits at 3.60%. Still a long way off the 0.1% it was back in early 2022, but I’d wager we’ll get more cuts.
Fixed Rates Worth Considering
The fixed rate market has been quietly falling. One and two year fixed rates are looking pretty tasty: 1-year rates start at 5.19%, 2-year rates start at 4.99%.
The Power of Compound Interest
Say you have a $650,000 loan at 5.79% over 30 years. Your monthly repayment is $3,809. Your variable rate falls to 5.54% — new repayment $3,706/m, saving $103 per month or about $37,000 over the life of the loan.
If you recycle the $103 per month back into your home loan, you’ll reduce your loan term by almost 2 years, saving c. $53,000 in interest.
Fix 50% of your loan on a 1-year rate and you’d save even more — potentially knocking more than 3 years off your loan term and saving more than $80,000 in interest.