Banking consumers rejoice: the cash rate has remained at a record-low 2 per cent for another month. The Reserve Bank of Australia (RBA) kept the amount it charges to your bank for its own loans at this historic, bottom-basement figure. Good news, right?
Well, probably not. While the banks are quick to tell you this makes conditions good for borrowing – they really want you to take out a loan – the cash rate seems to have little to no bearing on the interest you're charged.
The cash rate is meant to be passed on to customers, but instead, the big four banks have all increased their interest rates in recent times. So who cares about the cash rate?
Unless you're looking at working with a lender who has refused to increase their interest rates (meaning they have indeed passed on the savings), the cash rate decision will probably mean less than nothing to you.
And yet what do you do if you need a home loan? The price of a house is still a little high for most people to buy outright, and depending on where you live, the cost is rising ever still. For instance, CoreLogic's Tim Lawless recently explained that the last quarter again saw the value of capital-city homes increase by 0.7 per cent over the past six months.
If you need a mortgage, don't be taken in by the smoke and mirrors that the RBA's cash rate decision brings. Behind them is nothing but empty promises and higher interest rates. Your house is going to be the most expensive thing you ever buy, so take the time to look at the numbers and decide on a mortgage that's right for you and your bank account.
To see what CAPE has to offer, check our our home loan repayment calculator, or give us a call on 1300 330 056 and see how we measure up against the rest.