If the RBA does finally choose to cut rates, everyone will be waiting for their lender to announce whether it will pass the central bank’s decision on.
If they do, then you should start to see the change in your repayments in less than a fortnight after your own bank’s announcement.
But financial advisor Nicole Gardner revealed that some lenders have a specific loan recalculation schedule, which means it could take a while for those savings to hit your account.
“I know that my bank, in particular, only recalculates mortgage repayments in March and September,” she said.
“So for me, if there’s an interest rate cut in April, I could potentially be waiting until September until my bank tells me that I can start paying less towards my mortgage.
This will all depend on your loan amount and your arrangement with your bank, and if you’re not sure what that arrangement is then Gardner said it’s best to contact your lender to see what will happen to your repayments.
Interestingly, new modelling from Equifax found shows the full positive impact of an interest rate cut will only be seen in six to nine months.
“There often is a bit of a lag because it’s only one cut and usually takes a few moves before people start to take it seriously,” AMP economist Shane Oliver explained.
“It can take a while for banks to fully pass on the cuts to customers and it also takes a while for homeowners to realise their bank account is looking better than prior to the cut.”
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