It's been two months since the RBA started cutting rates, here's what you should have done by now
It’s been nine weeks since the Reserve Bank of Australia began its campaign of rate cuts, and if you haven’t been making the most of it, you’re looking at thousands of dollars down the drain.
The RBA cut rates by 0.25 per cent both in June and July, bringing the official interest rate to a record low of 1 per cent.
Related story: RBA expected to hold while cuts play out
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While all four big banks passed on at least some of the two consecutive interest rate cuts there are still better deals out there, with the cuts triggering a “rate cutting frenzy” across these and other loans.
"If you haven't compared your personal finance products in the past eight weeks you're looking a gift horse in the mouth,” consumer advocate at Mozo, Tom Godfrey told Yahoo Finance.
"Take home loans, before June the average variable rate for an owner occupier paying principal and interest was 4.31 per cent, now it's 3.93 per cent,” he said.
“That's a $31,782 saving on a $400,000 loan over 30 years.”
“It's a similar story for investor loans, the average variable rate was 4.76 per cent, now it's 4.37 per cent. That's a $33,494 saving on a $400,000 loan over 30 years.”
Finding out your home loan rate is a good start
According to new data released by UBank today, only 25 per cent of Australians can say with accuracy what their mortgage rate is. However, that reflects an increase from 14 per cent in 2018.
And, the research found that 40 per cent of Australians try to find the best rate when they’re refinancing - but 31 per cent haven’t looked at all.
“While there was an improvement on last year, there are still too many Aussies out there who don’t know their mortgage rate,” said Lee Hatton, CEO of UBank.
“We encourage people to do their research and stay on top of their mortgage rate, as thousands of dollars can be saved by simply understanding where the best offers are and refinancing.”
You should check your savings account after the rate cuts
It’s also a good idea to think about your savings account, and question if they’re doing the most they can for your money.
With the official interest rate at a record low of 1 per cent, at call savings rates have dropped by an average 0.37 per cent since June, meaning the average ongoing at call savings account rate is now just 1.17 per cent - below inflation at 1.60 per cent.
“If you are looking for a savings account the best ongoing maximum rate in our database today is 2.55 per cent with the RAMS Saver Account. That’s 1.38 per cent higher than the average,” Mozo’s Godfrey said.
And your credit cards too
Your credit card is another area where you could be making some major savings.
“Although credit card interest rates have remained stubbornly high in the face of consecutive official rate cuts, it still pays to compare what’s on offer. The average non-rewards credit card interest rate is 14.88 per cent but the Mozo has found rates as low as 8.95 per cent from Auswide Bank,” Godfrey said.
“A little legwork to find out what deals are available can save you thousands of dollars over the life of your loan and see you bank a greater return on your savings."
Your post RBA rate cut to-do list
If you haven’t compared rates since June, here’s what you need to cross off your to-do list:
Get your bank on the phone and find out your interest rates
Compare home loan interest rates,
Compare savings accounts,
Compare credit cards, and
Switch to the best rates in the market across all your personal finance products.
As Treasurer Josh Frydenberg said in June, if your bank hasn’t passed along the full rate cuts, you should seriously consider moving.
“The impact of a 25 basis-point cut on a $400,000 mortgage is the equivalent of saving around $60 a month or $720 a year,” he said.
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