RBA cuts the cash rate for the first time since 2020

Finally, a long-awaited reprieve for borrowers. The Reserve Bank of Australia has today cut the cash rate by 25 basis points to 4.10%. How much could this rate cut decrease your monthly mortgage repayments? And can we expect more cuts this year?

This is the first time the Reserve Bank of Australia (RBA) has cut the cash rate since it slashed rates to 0.10% in November 2020 in response to the COVID-19 outbreak.

Since then, we’ve had 13 cash rate hikes as the RBA attempted to rein in inflation.

RBA Governor Michele Bullock said in a statement that inflationary pressures are now easing a little more quickly than expected after recent data showed December quarter underlying inflation was 3.2 per cent.

“There has also been continued subdued growth in private demand and wage pressures have eased,” Governor Bullock said.

“These factors give the Board more confidence that inflation is moving sustainably towards the midpoint of the 2–3 per cent target range.”

How much might your mortgage repayments now decrease?

Unless you’re on a fixed-rate mortgage, hopefully your bank will soon follow the RBA’s lead and decrease the interest rate on your variable home loan.

For an owner-occupier with a 25-year loan of $500,000 paying principal and interest, this month’s 25 basis point rate cut means your monthly repayments could decrease by about $77 a month. That would put $924 a year back into your household budget.

If you have a $750,000 loan, your monthly repayments will likely decrease by about $115 a month – or $1380 per year.

Meanwhile, a $1 million loan could decrease by about $154 a month – or $1848 a year.

This all assumes that your lender automatically passes on the full 25-basis point cut to your home loan.

After so many years of rate hikes and higher interest rates one would hope they would, and there will be public and government pressure for lenders to do so (especially with a federal election around the corner).

Another thing to consider is that not all lenders automatically reduce variable home loan monthly repayment amounts in line with rate cuts.

Some lenders simply maintain your repayment amount at the old level. It’s just that more of your money goes towards paying off the principal (rather than the interest) each month. But you can ask them to reduce your repayments in line with their cuts.

To find out what your lender is doing with your loan, get in touch with us in a few days once the dust has settled.

How low are interest rates expected to go in 2025?

There are still seven more RBA meetings this year, during which the board may cut the cash rate further. But the RBA remained tight-lipped on whether more cuts will follow in their most recent statement.

Here are what economists at the big 4 banks are predicting though.

– NAB: cash rate falling to 3.10% by February 2026 (four more cuts)
– CBA: cash rate falling to 3.35% by December 2025 (three more cuts)
– Westpac: cash rate falling to 3.35% by December 2025 (three more cuts)
– ANZ: cash rate falling to 3.85% by August 2025 (one more cut)

Are you worried about your mortgage? Get in touch

Despite this latest cut, there are still plenty of Australian households feeling the pinch of cost of living pressures and high interest rates.

If you fall into that category and haven’t had a home loan health check in a while, get in touch to see if you could be doing better on your home loan.

Some options we can help you explore include renegotiating with your current lender, refinancing to another lender, or debt consolidation.

Every household is different – and we’d be more than happy to help you come up with a tailored plan for yours.

Disclaimer: The 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.

The scheme that’s helped 193,000 Aussies buy a first home

If you’re in the market for a first home, there’s one scheme you should know about. It’s called the Home Guarantee Scheme, and it could slash the time it takes to buy a place of your own by several years. Here’s how it works.

Saving that all-important 20% deposit for a first home isn’t easy – especially given the current cost of living crunch.

In fact, the average time taken to pull together a first home deposit has now hit 10.6 years, according to CoreLogic.

But with the Home Guarantee Scheme (HGS), you may be able to buy with just a 5% deposit – without paying lenders mortgage insurance.

No wonder 193,000 first home buyers have used the HGS to get into the market since it launched in 2020.

How the Home Guarantee Scheme works

Instead of giving first home buyers a cash payment, which is (essentially) the case with the First Home Owner Grant, the HGS sees the federal government guarantee your home loan.

This can benefit first-home buyers in two ways.

First, under the HGS, lenders can let you take out a home loan with just a 5% deposit. Of course, some banks already offer this.

But if you have a deposit below 20%, you’ll usually be asked to pay lenders mortgage insurance (LMI), and that can cost many thousands of dollars.

That’s where the second upside of the HGS comes in.

Buyers using the scheme aren’t slugged with LMI, as the government acts as guarantor for your mortgage instead.

Three HGS options

The HGS is pitched at three types of buyers:

1. First Home Guarantee

The First Home Guarantee aims to help eligible first home buyers get a place of their own sooner.

In the current financial year, a total of 35,000 places are available.

2. Regional First Home Buyer Guarantee

If you’re planning to buy a first home in a regional area, the Regional First Home Buyer Guarantee could match your needs.

Only 10,000 places are up for grabs in the scheme this financial year, so reach out sooner rather than later if you’d like to explore this option.

3. The Family Home Guarantee

If you’re a single parent, the Family Home Guarantee is even more generous.

It allows eligible applicants (you don’t have to be a first home buyer) to purchase a home with as little as a 2% deposit without paying LMI.

The catch is that only 5,000 places have been made available for the 2024-25 financial year.

Why more first-home buyers are using the 5% deposit scheme

Just five years ago, around one in 10 first home buyers turned to the HGS for help buying a first home.

Today that figure is closer to one in three.

And it’s not just about rising property prices, higher interest rates or cost of living pressures.

The First Home Guarantee and the Regional First Home Buyer Guarantee have been expanded to include friends, siblings and other family members buying together, along with non-first-home buyers who haven’t owned a property in Australia in the past 10 years.

The fine print

The 5% first home buyer deposit scheme does have a few strings attached.

You will need to meet eligibility conditions.

These chiefly relate to your income and the maximum price you plan to pay for your first home – property price caps also apply.

The other thing to be aware of is that not all lenders have signed up to the HGS, so your options can be a little more limited.

Talk to us to get the ball rolling

If you’re interested in fast-tracking your path to home ownership, the 5% deposit HGS could be the solution you’ve been looking for.

Talk to us to find out if you’re eligible for the Home Guarantee Scheme – and discover the lenders that can help you get across the line.

Disclaimer: The 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.

What happens to my home loan if interest rates fall?

Great news for home owners – 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’s been a long time between drinks for home owners celebrating a rate cut.

The last time the Reserve Bank of Australia (RBA) gave rates a chop was back in 2020.

But the tide may be about to turn.

A growing chorus of economists – plus banks including NAB and Westpac – are expecting a rate cut of 0.25% when the RBA board next meets on February 17-18.

Of course, nothing is set in stone.

If we do see rates head lower though, it’s worth knowing how your home loan and repayments could be impacted.

What will happen to my loan rate?

If you have a fixed-rate home loan, it’s business as usual no matter what happens to the cash rate.

Your fixed rate won’t change and neither will your required monthly repayments.

That said, if you’re coming to the end of a fixed term, it’s worth having a chat with us about your next moves once the fixed rate expires.

The real action occurs if you have a variable rate home loan.

If the RBA cuts the cash rate, your variable home loan rate should fall too.

By how much? Well, banks don’t have to follow the cash rate. And history has shown that lenders haven’t always passed on rate cuts in full.

But banks may want to avoid potential backlash, especially given the current cost-of-living climate.

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.

How do you find out the new rate? Your lender will get in touch to let you know.

Will my repayments change if rates fall?

Not necessarily.

Some lenders automatically reduce home loan repayments in line with rate cuts.

Other banks, however, simply maintain your repayments at the old level. It’s just that more of your money goes towards paying off the principal (rather than the interest) each month.

This can be frustrating if you’re hankering for some extra money for your family budget each month.

However, some banks take the view that by maintaining your old repayments, they’re helping you pay more off the loan and get ahead with your mortgage.

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.

How much might your mortgage repayments decrease?

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.

That would put $924 a year back into your family budget.

If you have a $750,000 loan, your monthly repayments would likely decrease by about $115 a month – or $1380 per year.

Meanwhile, a $1 million loan would decrease by about $154 a month – or $1848 a year.

Worried about your mortgage? Get in touch

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.

If you fall into that category and haven’t had a home loan health check in a while, get in touch to see if you could be doing better on your home loan.

Some options we can help you explore include renegotiating with your current lender, refinancing to another lender, or debt consolidation.

Every household is different – we’d be more than happy to help you come up with a tailored plan for yours.

Disclaimer: The 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.

The top 5 location turn-offs for Aussie home buyers

Ever spotted a bargain property and then thought to yourself: ‘What’s the catch?’ Well, more often than not there’s a good reason behind a lower-than-expected price tag. And while an undesirable location might not be a deal breaker for you, it could make it harder to sell later.

Beautiful home, dead quiet neighbours. Sounds brilliant, right?

Well, perhaps not if the property is next door to a graveyard.

There’s a lot to be said for the old adage ‘you can change a home but you can’t change the location’.

And new research from Compare the Market reveals the top five location turn-offs for home buyers.

It’s worth knowing what they are because, while these locations may help lower the price of the home, they can make things a little difficult for you later down the track when you try to sell.

1. Close to a tip

Landfills are a fact of life. But that doesn’t mean you have to live near one.

Close to one in three Aussies rate locations next to a dump as their top bugbear when considering where to buy (or rent – investors take note).

No surprises there. The sight and smell of rubbish is hardly a neighbourhood drawcard.

2. Next to the airport

“Close to transport” is often a popular sales pitch.

But under a flight path? Well, not everyone has Darryl Kerrigan’s sunny optimism when it comes to “location, location, location”.

One in five buyers say they couldn’t put up with airport noise.

3. Overlooking a graveyard

It may be the dead centre of town, and the neighbours aren’t likely to make much noise.

But 16.5% of buyers are spooked by the thought of a home next to a graveyard.

4. Alongside a highway

The relentless hum of traffic, exhaust fumes and the occasional screech of sirens.

It’s all too much for more than one in ten buyers who would walk away from properties located near a highway.

5. Next to a railway

It’s not a huge deal breaker for the majority of buyers.

But almost 7% are turned off by homes situated next to train lines.

Decide your location blacklist

What’s interesting from the above results is that there is no single location factor that the vast majority of buyers would shun.

Flight paths may matter to some, but aircraft noise is seen as a norm of urban living for others.

What matters is that you take a step back and consider ‘what are any negatives for the area?’ when you find a place you’re thinking of buying.

If there are potential downsides, it may not be the end of the world. You can always raise the issues as part of your price negotiations.

Or, if the location is seriously problematic (think wedged between a graveyard and a highway, and close enough to the airport to hear final boarding calls), it could be time to look elsewhere.

But you may compromise on other factors, such as land size or a spare bedroom, so you don’t have to settle for an undesirable location.

Talk to us

Deciding your ideal location may involve some give and take. A good starting point is finding out what you can afford to buy.

Get in touch today and we’ll help you work out your borrowing capacity.

Disclaimer: The 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.

How to finance your 2025 home renovation

Bathroom blitz? Kitchen kit out? Or perhaps some landscaping love might be on your house upgrade wishlist for 2025? If so, it’s worth knowing what reno finance options are available. Today we’ll explain some ways to fund your home improvement project.

Spending on home renovations has boomed over the past five years, and it seems we’re not done yet.

The Housing Industry Association says high property values are giving Australians more home equity – and confidence – to go ahead with home improvements at near-record levels.

It’s exciting stuff, especially as home improvements can boost your lifestyle and your home’s value.

Here are some of the renovation loan options that could help transform your place into your dream home.

Use your offset account or redraw

You may have cash stashed in a home loan offset account. Or, perhaps you’ve been paying more than the minimum loan repayments, providing a source of funds via redraw.

Both could provide money to help fund your renovations.

But be sure to talk to us first about the possible impact on your home loan.

Savings held in an offset account, or those extra loan repayments, can help you save on loan interest.

So you’ll want to crunch the numbers before you dip into an offset account or redraw facility.

Top up your existing home loan

If you have sufficient home equity, you may be able to borrow a bit extra with your existing home loan through a loan top-up.

While this option may be more straightforward than switching to a new lender, it’s worth noting that some lenders can charge fees to top up a home loan.

Refinance to a new loan

Another possible source of reno funds could be refinancing to a new loan.

Your old loan may no longer have a competitive interest rate or the features you need.

The beauty of refinancing is that it can put any additional home equity you’ve recently acquired to work, which could provide the funds needed to pay for renovations.

The added sweetener could be interest rate savings and/or more flexible loan features.

Consider a construction loan

If you’re planning a major project, such as a new extension or a knock-down-and-rebuild, a construction loan could be worth a look.

A construction loan is purpose-built for renovation and building projects.

The funds are drip-fed to you as each stage of your project is completed. You only pay interest on the funds drawn down, and during the building phase you will typically only need to make interest-only repayments. This can help you save money on interest costs.

As an added plus, some lenders may provide pre-approval for construction loans even before you’ve chosen your builder.

Getting pre-approval can be a good way to know how much you can spend on your renovations, helping you set a project budget.

Understand the options available for your project

It’s difficult to start planning a renovation until you know just how much you can afford to spend.

So if you’d like to get a clearer idea on what’s possible for your 2025 renovation plans, contact us today and we’ll work hard to help you get rolling on your project.

Disclaimer: The 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.