All about australian mortgage rates during crisis
Updated: Apr 6
Uncertain times call for uncertain measures. This crisis has forced so many of us to take steps that we wouldn’t normally do in the past – like practice social distancing, which is something that highly sociable individuals are not really used to. So many businesses have to shut down temporarily and most people are required to work from home. All industries are hit, including major banks. This crisis has forced the banks to make changes too.
On the 29th of March, Reserve Bank of Australia announced an emergency interest cut that “reduced the cash rate to 0.25 percent”.
So far, only a few have banks followed suit and responded to this change, but this made a record low-interest rate specifically for residential borrowers. The current batch is considered to be very cheap, so is now the best time to refinance?
Things are different if you look back during this time last year. The rates were in the “high threes”, so according to experts, the answer is quite possibly yes- it’s the best time to refinance. Now, if you’re wondering if the mortgage rate is dropping even further. According to experts, the current mortgage rates are the lowest it has dropped in history so the chances of it going down further are pretty slim. Although we cannot be completely sure about it because no one knows what the future holds, it’s actually smarter to think that it’s not going to go down any further.
While the rates are attractive and you might think that this is the perfect time to explore options at your bank, it’s very important to look at the pros and cons first before anything else. For instance, fixed loans offered at different banks have limited features. It’s important to have the fixed loan structured the right way because there’s a possibility of it being problematic. Experts suggest that the part-fixed, part-variable route is the best way to go. Splitting loans has been very popular among borrowers, and this is their way of making smarter decisions during uncertain times.
The crisis also added so much stress on a lot of borrowers and it’s a good thing that banks are assessing customers one by one to find out if the current crisis affected them in any way. The banks are said to adjust their policies to those who have been heavily affected by the pandemic. Of course, not all banks have the same adjustments but most of them do payment holidays here repayments are paused for a couple of months.
Social distancing is one of the best ways to combat this virus and refrain from spreading. Thanks to technology, refinancing can be done effectively online. Know more about the rates and refinancing by asking your banks for more information about this.