Yahtzee! Just over a week ago, the Governor of the Reserve Bank of Australia announced a rate cut of 0.15%, bringing the official cash rate down to a record low 0.10%. This may sound paltry, however to put it in perspective, the average Australian household is expected to be around $15,000 better off, throughout the course of their loan.

Great news, right? Maybe. The question remains – will your lender pass on those cuts to you?

FIXED LOAN: If you are on a fixed rate loan, sadly the answer is no. When you locked in your rate, you and your bank agreed that the rate would not go up or down no matter what happened to the official cash rate. If you locked in a fixed rate in the last year it is likely that your fixed rate is still lower than the variable rates available at the same bank so perhaps not all doom and gloom.

VARIABLE LOAN: If you are on a variable rate loan, the answer is - maybe. It’s entirely up to your bank’s discretion if they choose to pass on the cuts to their customers. Personally, I doubt any of the banks will apply the entire 0.15% cut. However, I am more than happy to be wrong about that. Time will tell.

Believe it or not, the best loans are not always about the lowest rate. Whilst a low rate is important, it is a distant third behind determining your specific circumstances and the product, when determining what is best for you. Perhaps you should be asking, “is it time I reviewed my circumstances, loan product and interest rate?”

So, if your bank has not yet passed on the cut, it’s time to refinance to a more competitive deal. Almost all loans that are at least three years old can be improved by either swapping lenders or prompting your existing lender to sharpen your rate.

Let me know if you want to discuss your options, it’s a simple call that can potentially save you thousands over the course of your loan. I’m here to help.

Michael