On March 5th, the Reserve Bank decided to cut the official cash rate by 25 basis points to a new record low of 2.00%.
After such a historic rate cut, there was always bound to be a veritable snowstorm of information flying around about how the country would be affected, how big business would be affected, but for the average Australian home owner, it can be quite difficult to discover just how they will be affected.
At The Greater, we’re committed to the interests of our customers above all else, and we truly believe in delivering them straightforward banking whenever we can. Part of the philosophy of straightforward banking is providing clear, easy to understand answers and information about their finances.
So we’ve examined the RBA’s decision to take 25 basis points from the official cash rate and broken it down for you, should your bank pass on the full rate cut. To see what the cut could mean for you, take a look at our facts and figures below, or check out our infographic for the ramifications in a nutshell.
For a $200,000 Loan
- Monthly - For loans of this size, an interest rate reduction of 0.25% will mean a monthly repayment saving of around $31. In real world terms, nowadays this buys you two tickets to see a blockbuster film and a decent visit to the candy bar.
- Yearly - Over the course of a year, you’ll save $372 in repayments, which for most of us will cover the registration of our car for 12 months (one less thing to worry about!)
- Life of Loan - Life of Loan: And over the life of your loan, this interest rate cut of 0.25% will mean you’ll save $11,160 in repayments. Do we need to tell you what you could do with this much extra cash?
For a $300,000 Loan
- Monthly - If this sounds like your loan, a rate cut of 0.25% will translate into a monthly repayment saving of $46. For the majority of us, this will cover our monthly phone bill (unless you’ve developed a bit of a texting habit!)
- Yearly - Over the course of a year for a loan of this size, a rate cut or 0.25% will save you $552 in repayments. In 2015, this will get you a brand new laptop with all the bells and whistles you could hope for – perfect for doing your banking online!
- Life of Loan - And over the life of your loan, the repayment savings for a loan of this size would equate to $16,560. Again, we’re sure your mind is abuzz with what this saving could do for you.
For a $400,000 Loan
- Monthly - After the RBA rate cut of 0.25%, the repayment savings on a loan of $400,000 in a single month would be $61. Think of that as a tank of fuel – bought and paid for. Even with fuel prices as low as they are, that’s a handy saving.
- Yearly - Over 12 months, with a loan of $400,000, you’ll be set to save $732. In real world repayment terms, if you can’t get a brand new HD TV for this price, you’re shopping in the wrong place.
- Life of Loan - And over the life of your loan, thanks to the latest RBA rate cut, if you have a home loan of $400,000, you’re set to save $21,960 in repayments. That’s right. We said $21,960.
So, now that someone has finally laid out in real world terms just what the RBA rate cut means for you as a home owner, perhaps you’re wondering if your current loan is the right fit, or if you could be getting a better deal?
In the interest of straightforward banking, we’ve made it easy for you to find out. Why not take a minute and make use of our handy Home Loan Comparison Calculator? Simply punch in a few details and see if you could be saving more on your Home Loan. Get started by clicking here.
And if you’re interested in making the switch, find out just how easy it can be. Our How-To guide to Switching your Home Loan to The Greater walks you through the process from go to whoa. Check it out here.