Cup Day rate cut would give mortgage holders $46 a month: RateCity
A now expected RBA rate cut on Melbourne Cup Day will save the average mortgage holder around $46 a month, according to mortgage comparison website RateCity.
The figure is calculated based on the cash rate being cut by 25 basis points to 4.5% and lenders passing on this rate cut to borrowers on variable rate mortgages.
Speaking on ABC radio today, federal Treasurer Wayne Swan said there would be “no excuse whatsoever” for banks not to pass on the expected rate cut.
Based on an average mortgage size of $288,000 and a variable mortgage rate of between 6.86% and 7.11%, a 25-basis-point trim would give borrowers an extra $46 to spend on other goods, save for a rainy day or perhaps, as Tony Abbott suggests, blow on the pokies.
On average NSW borrowers will see the greatest reduction in monthly mortgage payments with $51 per month being trimmed while Tasmanians, which have the smallest average loan size ($187,000) will see the smallest jump in bank balances of just $30 per month.
How a 0.25% rate cut impacts variable rate mortgage borrowers across Australia
| Average mortgage size | Monthly repayment at current benchmark variable rate (7.11%) | Monthly repayment if benchmark variable rate cut by 0.25% (6.86%) | Monthly saving if rate cut by 0.25% |
National | $288,300 | $2,058 | $2,012 | $46 |
First home buyer | $283,900 | $2,027 | $1,981 | $45 |
NSW | $320,500 | $2,288 | $2,237 | $51 |
VIC | $290,700 | $2,075 | $2,029 | $46 |
QLD | $279,300 | $1,994 | $1,949 | $45 |
SA | $228,400 | $1,630 | $1,594 | $36 |
WA | $265,300 | $1,894 | $1,851 | $42 |
TAS | $188,700 | $1,347 | $1,317 | $30 |
NT | $279,200 | $1,993 | $1,948 | $45 |
ACT | $273,500 | $1,952 | 1,909 | $44 |
Source: RateCity, Australian Bureau of Statistics August 2011 Housing Finance data