Whenever the Reserve Bank of Australia (RBA) changes the official cash rate we all hear about how it will impact home loans. But it affects many other areas of finance and the economy, which we’ll look into today.
The RBA has cut the official cash rate to a new record low of 1%, just one month after lowering it to 1.25% - which was the first rate cut in almost three years (since August 2016).
Now, whenever this happens we all hear about what it will mean for mortgage-holders.
But it also has a flow-on effect for many other areas of finance, which we’ll look into below.
If you’re saving for a first home deposit
If you’ve got a large chunk of your money in a savings account and you’re trying to save for a first home deposit, the latest two RBA rate cuts probably aren’t the best news for you.
That’s because you want your savings account to have the highest interest rate possible and a cut in the official cash rate will likely mean a reduction in interest you earn on your savings.
If you are worried interest rates are going to be cut further, and you want to lock in a rate for a particular length in time, you can look into a term deposit account.
Alternatively, if you think now is a good time to jump into the property market, feel free to give us a call and we can run you through your financing options.
Car finance
If the RBA cuts the official cash rate, the interest rates on car loans generally go down too.
The bad news is that if you have already taken out a car loan it usually has a fixed interest rate for the period of your loan term.
The good news is with interest rates at an all-time low, if you’re thinking about buying a new car or refinancing an existing car loan, now might be the time to lock a rate in.
The many other types of loans
Changes to the cash rate affect interest rates on all kinds of loans, including commercial and business loans, asset and equipment finance, investment loans.
If you’re thinking about taking out any type of loan, or weighing up the pros and cons of refinancing, give us a call and we can give you the lowdown on the new landscape.
Credit cards
Yep, the official cash rate generally has an effect on the interest rate on credit cards too.
That’s because lowering the interest rate is meant to encourage people to spend more - including on plastic - which in turn can give the economy a boost.
If you’re someone who has been guilty of spending a little too much on your credit card, however, get in touch - we can help you look into consolidating it with other debts that are ripe for refinancing now.
Get in touch
Basically, it comes down to this: if you have an existing or prospective debt and you want to see how it all stacks up on the back of the two consecutive RBA rate cuts, then get in touch.
We’re following the market closely and can tell which lenders are passing on the rate cuts to their customers, which lenders aren’t, and present you with refinancing options.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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.
