What Happens When Interest Rates Drop?
If the RBA reduces the cash rate, it could significantly impact your mortgage. Here’s what you need to know in our Q&A below:
1. Will Your Bank Automatically Adjust Your Loan?
No, banks typically do not automatically reduce your interest rate when interest rates drop. If you have a fixed-rate loan, your rate remains unchanged until the fixed term ends. If you have a variable-rate loan, your rate should decrease, but it’s not guaranteed – banks adjust rates at their discretion. To ensure you’re getting the best deal, it’s a good idea to review your loan regularly. You can call us at anytime to discuss your rate and discuss your options.
2. Timing Matters
Even if the RBA announces a rate cut in February, the effects won’t be immediate. Banks typically take a few weeks to adjust their rates, and this can vary across lenders. Staying informed and proactive is key to ensuring you benefit from any changes.
3. Will The Bank Notify You?
Most banks will communicate interest rate changes to their customers, but it’s always a good idea to stay vigilant. Don’t assume your lender has your best interests at heart; they might not pass on the full benefit of the cut.
How You Can Stay Ahead
You may receive a letter from your bank. If you would like advice on this reach out to your broker or call the Go Mortgage office on 1300 855 244
At Go Mortgage, we keep a close eye on interest rate movements to ensure our clients get the best possible deal. Here’s how we can help:
Mortgage Health Check
Let us review your current loan to see if you’re on the most competitive rate.
Refinancing Options
If your lender isn’t passing on rate cuts, we can help you explore alternatives.
Expert Guidance
We’ll explain how rate changes impact your repayments and guide you on the best steps forward.
What’s Next for Interest Rates?
Lenders and economists are divided on the timing of the RBA’s first rate cut. While some, like ANZ and CBA, predict cuts as early as February, others believe it could happen later in the year. Regardless, the consensus is that rates are set to ease in 2025, creating opportunities for borrowers.
However, a rate drop doesn’t automatically translate to easier homeownership. High serviceability requirements and elevated property prices remain challenges for many buyers. That’s why having the right mortgage strategy in place is more important than ever.
Take Control of Your Mortgage Today
With interest rate changes on the horizon, now is the perfect time to review your mortgage. Don’t wait for your bank to act – take charge of your financial future with Go Mortgage.
Ready to start saving? Book in with one of our specialised brokers today.