Home loan applications have more than doubled since loans.com.au dropped its interest rate to 4.23 percent p.a in the wake of the RBA cash rate cut.
The market leading online lender was one of the first Australian home loan providers to pass on the full 0.25 percent cut after the RBA dropped the Official Cash Rate to 2.25 percent at its February meeting.
“The response has been really heartening, with an increase of more than a hundred percent in applications in a week,” said Mr Kim Cannon, Managing Director of Firstmac, the financial powerhouse behind loans.com.au Pty Ltd
“The RBA move has really shaken up the home loan market and prompted people to take a close look at their interest rate.”
The rate is 1.42 percent p.a lower than the standard variable home loan rate announced by Commonwealth Bank in the wake of the RBA cut, which means a loans.com.au customer with a $300,000 home loan is approximately $3,112 a year better off, or $93,380 over the life of the loan.
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“Home loan customers have really come to realise they can get better value for their repayment dollar by seeking out alternatives to the major banks,” Mr Cannon said.
“They are refinancing in record numbers for a better deal, and they see the value of using a mortgage offset to save even more interest over the life of the loan. The majority of borrowers are opting for the offset facility and paying off their home sooner.”
While loans.com.au is recognised as having one of the lowest fixed interest rates for three years at 4.48 percent p.a, 4.33 percent comparison, at this stage the majority of borrowers are keen to stay with a variable rate loan.
“Some sectors of the market speculate that the RBA is not quite finished with cutting the cash rate, which would mean we could see another drop before the year is out,” Mr Cannon said.
“With variable rates being as low as they are, many borrowers feel they have nothing to lose by watching and waiting to see if they go any lower.”