{"id":5546,"date":"2025-02-06T10:49:04","date_gmt":"2025-02-06T00:49:04","guid":{"rendered":"https:\/\/financialplus.com.au\/?p=5546"},"modified":"2025-02-06T10:49:04","modified_gmt":"2025-02-06T00:49:04","slug":"what-happens-to-my-home-loan-if-interest-rates-fall","status":"publish","type":"post","link":"https:\/\/financialplus.com.au\/what-happens-to-my-home-loan-if-interest-rates-fall\/","title":{"rendered":"What happens to my home loan if interest rates fall?"},"content":{"rendered":"

\"\"Great news for home owners \u2013 plenty of economists are tipping an RBA rate cut for February. Assuming it happens, once the celebrations have died down, what next? We explain what to expect when rates head south.<\/strong><\/p>\n

It\u2019s been a long time between drinks for home owners celebrating a rate cut.<\/p>\n

The last time the Reserve Bank of Australia (RBA) gave rates a chop\u00a0was back in 2020<\/a>.<\/p>\n

But the tide may be about to turn.<\/p>\n

A growing chorus of economists \u2013 plus banks including\u00a0NAB<\/a>\u00a0and\u00a0Westpac<\/a>\u00a0\u2013 are expecting a rate cut of 0.25% when the RBA board next meets on February 17-18.<\/p>\n

Of course, nothing is set in stone.<\/p>\n

If we do see rates head lower though, it\u2019s worth knowing how your home loan and repayments could be impacted.<\/p>\n

What will happen to my loan rate?<\/h3>\n

If you have a fixed-rate home loan, it\u2019s business as usual no matter what happens to the cash rate.<\/p>\n

Your fixed rate won\u2019t change and neither will your required monthly repayments.<\/p>\n

That said, if you\u2019re coming to the end of a fixed term, it\u2019s worth having a chat with us about your next moves once the fixed rate expires.<\/p>\n

The real action occurs if you have a variable rate home loan.<\/p>\n

If the RBA cuts the cash rate, your variable home loan rate should fall too.<\/p>\n

By how much? Well, banks don\u2019t have to follow the cash rate. And\u00a0history has shown<\/a>\u00a0that lenders haven\u2019t always passed on rate cuts in full.<\/p>\n

But banks may want to avoid potential backlash, especially given the current cost-of-living climate.<\/p>\n

That would hopefully see most lenders pass on 100% of any rate cut. So, if the RBA cuts rates by 0.25%, your home loan rate should hopefully drop by 0.25% also.<\/p>\n

How do you find out the new rate? Your lender will get in touch to let you know.<\/p>\n

Will my repayments change if rates fall?<\/h3>\n

Not necessarily.<\/p>\n

Some lenders automatically reduce home loan repayments in line with rate cuts.<\/p>\n

Other banks, however, simply maintain your repayments at the old level. It\u2019s just that more of your money goes towards paying off the principal (rather than the interest) each month.<\/p>\n

This can be frustrating if you\u2019re hankering for some extra money for your family budget each month.<\/p>\n

However, some banks take the view that by maintaining your old repayments, they\u2019re helping you pay more off the loan and get ahead with your mortgage.<\/p>\n

To find out if your bank is automatically dropping your monthly repayments, or if you need to request for it to happen instead, get in touch with us and we can let you know.<\/p>\n

How much might your mortgage repayments decrease?<\/h3>\n

For an owner-occupier with a 25-year loan of $500,000 paying principal and interest, a 25 basis point rate cut means your monthly repayments could decrease by about $77 a month.<\/p>\n

That would put $924 a year back into your family budget.<\/p>\n

If you have a $750,000 loan, your monthly repayments would likely decrease by about $115 a month \u2013 or $1380 per year.<\/p>\n

Meanwhile, a $1 million loan would decrease by about $154 a month \u2013 or $1848 a year.<\/p>\n

Worried about your mortgage? Get in touch<\/h3>\n

Despite a potential rate cut on the horizon, there are still plenty of households around the country feeling the pinch of cost of living pressures and high interest rates.<\/p>\n

If you fall into that category and haven\u2019t had a home loan health check in a while, get in touch to see if you could be doing better on your home loan.<\/p>\n

Some options we can help you explore include renegotiating with your current lender, refinancing to another lender, or debt consolidation.<\/p>\n

Every household is different \u2013 we\u2019d be more than happy to help you come up with a tailored plan for yours.<\/p>\n

Disclaimer:<\/strong>\u00a0The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.<\/p>\n","protected":false},"excerpt":{"rendered":"

Great news for home owners \u2013 plenty of economists are tipping an RBA rate cut for February. Assuming it happens, once the celebrations have died down, what next? We explain what to expect when rates head south. It\u2019s been a long time between drinks for home owners celebrating a rate cut. The last time the […]<\/p>\n","protected":false},"author":23,"featured_media":5547,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[110],"tags":[],"class_list":{"0":"post-5546","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-home-loans","8":"entry"},"yoast_head":"\nWhat happens to my home loan if interest rates fall? · FinancialPlus Mortgage Broker Gold Coast<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/financialplus.com.au\/what-happens-to-my-home-loan-if-interest-rates-fall\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What happens to my home loan if interest rates fall? · FinancialPlus Mortgage Broker Gold Coast\" \/>\n<meta property=\"og:description\" content=\"Great news for home owners \u2013 plenty of economists are tipping an RBA rate cut for February. 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