Why Are Interest Rates Going Down?
In the past few weeks, we’ve seen several banks lowering their fixed interest rates, with some even reducing rates twice in the same month. This trend indicates a shift in the mortgage market that could benefit borrowers. But why are interest rates going down? Economic conditions, inflation rates, and banking competition are some factors contributing to these rate cuts. At Mantra Mortgage, we keep a close eye on these changes to help you make the most informed decisions.
Recent Reductions in Interest Rates: A Quick Overview
Here’s a summary of the recent interest rate reductions from various banks:
| Bank | New Rate Announced | New Rate Announced |
|---|---|---|
| Macquarie Bank | 12-Aug-24 | 5-Sep-24 |
| ME Bank | 9-Aug-24 | 6-Sep-24 |
| ING | 5-Sep-24 | |
| Commonwealth Bank | 23-Aug-24 | |
| UBank | 30-Aug-24 | |
| Westpac Group | 29-Aug-24 |
These banks have recently adjusted their rates, reflecting a potential easing in the lending market.
How Much Can You Save with a Lower Interest Rate?
Understanding how much you could save is crucial when considering refinancing. Here’s a breakdown of potential savings if you refinance to a lower interest rate of 5.59% from a higher rate of 6.24%:
| Loan Amount | Repayment @ 6.24% | Repayment @ 5.59% | Monthly Savings |
|---|---|---|---|
| $100,000 | $615 | $573 | $42 |
| $200,000 | $1,230 | $1,147 | $83 |
| $300,000 | $1,845 | $1,720 | $125 |
| $400,000 | $2,460 | $2,294 | $166 |
| $500,000 | $3,075 | $2,867 | $208 |
| $600,000 | $3,690 | $3,441 | $249 |
| $700,000 | $4,305 | $4,014 | $291 |
| $800,000 | $4,921 | $4,588 | $333 |
| $900,000 | $5,536 | $5,161 | $375 |
These figures are based on a 30-year term with principal & interest repayments.
Is Now the Right Time to Refinance Your Mortgage?
While lower interest rates are attractive, it’s important to consider whether refinancing is the right option for your specific financial situation. Refinancing typically involves a one-off cost of around $1,400. It’s crucial to weigh this cost against your potential savings to determine if refinancing is beneficial for you.
Factors to Consider Before Refinancing for a Lower Interest Rate
Before you make a decision, consider the following:
- Your Current Interest Rate: Compare it against the new rates.
- Loan Amount and Terms: The savings vary based on the loan amount and duration.
- Refinancing Costs: Consider the one-time cost of switching lenders.
- Long-Term Financial Goals: Align your decision with your broader financial objectives.
How to Lock in a Lower Interest Rate
If you decide that refinancing is right for you, the next step is to lock in the new, lower interest rate. Contact a mortgage broker like Mantra Mortgage to help you navigate the refinancing process. We’ll assess your situation, provide advice tailored to your needs, and handle the paperwork for you.
Current Lowest Interest Rates Among Major Banks
Right now, the lowest interest rate among major banks is 5.59% p.a. for loans with a 70% loan-to-value ratio (LVR), owner-occupied, and principal & interest repayments. This rate presents a fantastic opportunity to reduce your monthly mortgage payments.
Let’s Talk About Your Interest Rate Options
At Mantra Mortgage, we are dedicated to helping you find the best mortgage solution. If you’re interested in exploring how you can lower your interest rate and save on your mortgage, let’s chat! Reach out to us today to discuss your options and see how much you could save.
