What a rate cut could save SA homeowners

15 hours ago 3

It goes without saying that those with the largest mortgages will save the most in the event of an interest rate cut, but new data reveals homeowners in South Australia’s most affordable suburbs stand to save potentially more than $100 a month on repayments after the Reserve Bank’s next meeting.

Data analysis by Compare The Market shows, should the RBA cut the official cash rate on Tuesday by 0.25 per cent, median-priced unit owners in Salisbury will see a mortgage repayment reduction of $54, assuming their lender passes on the cut in full.

A cut of 0.5 per cent would see them save $107 a month off their current monthly repayments of $2023 on a $421,843 property.

A rate cut is tipped for Tuesday, when the Reserve Bank of Australia next meet. But how much they’ll drop the cash rate by remains to be seen. Pic: iStock.

Assuming a 0.25 cut is passed on in full, unit owners in neighbouring Salisbury East would also see an instant saving of $60 a month, and $118 should a 0.5 per cent cut be passed on.

This would bring their repayments down from their current $2236 to $2176 in the event of a 0.25 per cent cut, and $2118 if the cash rate is cut by 0.5 per cent.

FIND HOW MUCH YOU’LL SAVE IN YOUR SUBURB HERE

Real Estate Institute of South Australia legislation and industry adviser Paul Edwards said an interest rate cut would have a profound impact on the daily life of SA’s most vulnerable homeowners.

“For those at that more affordable end of the market, that sort of saving can have a much more noticeable difference to the family budget,” he said.

“If you are relying on an interest rate cute in order to be able to manage your mortgage then it’s time to be proactive about it and speak to your bank or get refinancing.

“People should absolutely make sure their bank passes any cut on in full and if they don’t they should shop around.”

Real Estate Institute of South Australia legislation and industry adviser Paul Edwards. Supplied.

The research shows buyers with an annual household income of $200,000 per year could see their borrowing power increase by as much as $100,600 should the cash rate drop by 1 per cent in the coming months and these reductions are passed on in full.

Compare the Market property expert Andrew Winter said this could send prices soaring, and urged people looking to enter the market to do so now.

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“The markets in Brisbane, Adelaide, Perth and Sydney have been extremely resilient, and that’s largely because there isn’t enough supply to keep up with demand,” Mr Winter said.

“These markets have performed well in less-than-ideal conditions. Another round of rate cuts is likely to add fuel to the fire.”