Will Mortgage Rates Go Down in 2019?

a black and yellow logo

Although we’re nearing the end of 2019, there is still time for mortgage rates to drastically change; however, things are looking good for property and homeowners. 

At the beginning of the year it was suspected that mortgage rates would steadily increase throughout most of 2019, however, the Reserve Bank of Australia has a different plan. The Reserve Bank of Australia, or RBA, has decided to cut their interest rates by 0.25%. At just 0.75%, interest rates are about to become the lowest they’ve ever been. This difficult decision was made in response to the current rate of economic growth. Throughout 2019, with economic growth rates resting at the low number of just 1.4%, Australia is experiencing the lowest amount of economic growth it has experienced in the last ten years.

Borrowing rates are historically low, for both corporate loans as well as personal loans, alike, in an attempt to rectify the current state of affairs and support the weakened economy, the RBA has decided to cut their interest rates in an effort to curb the ever rising unemployment as well as providing a solution to the lagging economy. Their hope is that these actions will offer relief for those struggling to make ends meet throughout Australia.

These changes will not take place until October 22, 2019, and once in place, they will hopefully assist in maintaining a neutral economic standing for the coming years. 

Despite the massive cuts made by the RBA, the majority of smaller and independent lenders have opted against majorly cutting their interest rates, for fear of depleting their profit margins. In order to still satisfy their customers, as well as to maintain business alongside their competitors, these banks have individually taken stock and altered their interest rates accordingly.

It has not yet been determined exactly how long these lowered rates will be upheld, but it will take a few years to properly attain an adequate rate of employment across the whole of Australia. 

So, what does all this mean for you, the borrower? At the bottom line, the interest rate decreases enacted will be beneficial to you as a borrower, but also detrimental to you as someone who keeps their money in a savings account. While the interest accruing on your mortgage will lessen, therefore your payments will decrease, but you will also be earning less interest back on the money you’ve saved.

As we’ve previously discussed, not all lenders will take part in the cut. At least, they may not partake right away, or in the full percentage of the rates being cut. In some cases, your lender may choose to slash their interest rates at a later time, but it may not necessarily be equal to the cuts established by the RBA. However, in the case that you’ve previously agreed to a fixed rate loan, you won’t be missing out entirely, you just have to wait until that fixed rate period is up before you are able to bask in paying the lowered rates set by your lender.   

Even if you and your lender landed on a you a variable interest rate, it’s never a bad idea to see if you might be able to strike an even better deal.If you’ve been on the fence trying to decide whether or not now is the right time to finally take out that loan, whether it be buying a new home or refinancing the home you already have, it could never hurt to at least check and see where you may be able to find the cheapest home loan rates available to you.