At the November meeting, The Reserve Bank of Australia decreased the interest rates to a record all-time low of 0.1%, dropping even further than the previous low of 0.25%. The Reserve Bank has reduced rates to assist in addressing the high rate of unemployment by providing relief (in the form of reduced funding costs) to the economy. While there is still a lot of economic uncertainty, as we work through the changing economic environment created by the pandemic, the Reserve Bank has looked to support the economy with the recent rate drop.
The stark reality of this drop is whether these rates will be passed on by the banks.
At this stage, most banks are keeping quiet on whether they will pass on the interest rate, but many experts are encouraging the banks to follow the Reserve Bank’s lead and pass it onto their customers. If passed on by the banks the monthly repayments on mortgages will reduce.
For example:
- A mortgage of $200,000 ($500,000) the monthly repayments will drop approximately $16 ($40) per month.
While this reduction will assist people with their mortgage, for others it is a further decline to savings income.
If you have a mortgage and haven’t had it reviewed recently, now would be a good time to consider your options. Talk a Crest Mortgage adviser today.
Additionally, if you have cash deposits and want to consider your options to potentially increase returns, speak to one of our advisers today.