The Reserve Bank of Australia (RBA) has reduced the cash rate by 25 basis points, lowering it to 4.10 per cent. This decrease could lead to an average monthly home loan saving of approximately $103, should banks choose to pass on the benefits to borrowers. Despite the cut, homeowners with an average loan of $641,416 will still face monthly repayments of around $3,784. For those with $1 million in debt, the savings amount to about $154 monthly.
Recent research from Finder reveals that around 35 per cent of borrowers are struggling to meet their mortgage payments, affecting approximately 1.2 million households. Many borrowers will require an additional $500 or even $1,000 less in repayments to alleviate financial pressure. However, forecasts from ANZ suggest only two more rate cuts this year, bringing the cash rate to 3.85 per cent, potentially leaving some borrowers wanting.
While major banks plan to implement the rate cut, Canstar warns that lower repayments could lead to paying significantly more over the loan’s lifetime. Finder’s head of consumer research articulated that while this rate cut offers relief, many Australians may still face tough financial decisions to remain afloat. To maximise potential savings, borrowers are encouraged to maintain current repayment levels if possible.