Switching loans from the average standard variable rate to the lowest rates on the market could save a mortgage holder $48,000 in interest over the life of a loan, according to financial comparison website Canstar.
Canstar says the average standard variable rate for mortgages is currently 4.43%, while the average of the lowest rates is 3.71% – a difference in repayments of $159 a month, based on a $400,000 home loan. Over the life of a loan that equates to $47,653 in interest saved.
Although the Reserve Bank this week kept the official cash rate unchanged yet again, Canstar finance expert Steve Mickenbecker says the RBA looks likely to reduce the rate in the near future. He says recent economic data suggests the previous possibility of a rate increase is “off the agenda altogether”.
“Lenders are factoring in rate cuts, with 274 fixed-rate cuts this calendar year,” he says. “The bigger rate cuts are in the 4-year and 5-year terms, with funding costs for Australian lenders following the downward trend for US longer-term interest rates.”