The Reserve Bank of Australia has kept interest rates on hold, but financial expert David Koch says homeowners can still take action to lower their mortgage costs.
While the RBA held the cash rate at 3.6 per cent, with no official relief expected until later in the year, Koch says borrowers can “DIY” their own rate cut by switching to a better home loan deal.
“Go and find a cut yourself,” he told Sunrise on Tuesday.
“First of all, work out how much you’re paying on your home loan. The average variable home loan rate is 5.76 per cent – if you’re paying more than that you’re a mug.”
“There are some (home loan rates) as low as around 5.3 per cent to 5.4 per cent, now that’s a $2000 difference over a year in repayments.”
Koch, Compare the Market’s economic director, also said homeowners could look into two-year fixed rates, with some as low as 4.79 per cent.
“That’s almost 1 per cent below the variable rates – that (amounts to) four Reserve Bank interest rate cuts,” he said. “You can save big money.”
According to Koch, many Australians are already making the move.
“In June, 65,000 homeowners refinanced their mortgage,” he said. “Lots of people are doing it. If you’re not getting those rates, go and look for a better deal.”
The advice comes after new inflation data showed the monthly consumer price index rose from 2.8 per cent to 3 per cent in August – a key reason the RBA held off on cutting rates.
Domain chief economist Nicola Powell said the small rise supported the central bank’s cautious approach.
No official rate cuts are expected until at least November.
Image: Sunrise
