The Reserve Bank of Australia’s (RBA’s) decision to lift the cash rate by 25 basis points to 4.25 per cent will flow quickly into higher mortgage rates from almost all institutions, according to RateCity. In fact, the financial comparison website has found that home owners are paying higher rates relative to the RBA cash rate than they have been over the past two years.
RateCity found that the average difference between the cash rate and the average standard variable rate was 1.89 per cent over the past two years, but the average difference is now 2.54 per cent above the cash rate — a relative increase of 0.65 per cent, according to the research.
With the current average standard variable rate sitting at 6.54 per cent, borrowers would potentially be paying $120 less per month if lenders were charging 0.65 per cent less (in line with the average of the past two years), the research found. This could amount to a saving of $1,440 each year for an average $300,000 home loan.
The research also found that the average standard variable of more than 100 lenders had increased by 1.45 per cent since its lowest level in July 2009, when it was 5.09 per cent. This is compared to the official cash rate, which has increased by 1.25 per cent since October 2009. It added that some smaller lenders had already begun to increase some of their home loan rates earlier this month before the official announcement by the RBA yesterday.
