Aaron WhybrowGeneral Manager, Strategic Mortgage Broker

What have you done with your rate cut?

Name: What have you done with your rate cut?
Uploaded: 2019-08-20T00:30:47Z
Duration: 2 min 11 s
Channel: Aaron Whybrow
Description: Aaron Whybrow breaks down recent rate cuts totaling roughly 0.3 to 0.5 percentage points and asks what you did with the savings. His advice: keep paying…

20 Aug 2019 · 2 min

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2:11

Aaron Whybrow breaks down recent rate cuts totaling roughly 0.3 to 0.5 percentage points and asks what you did with the savings. His advice: keep paying the same mortgage amount instead of spending the extra cash, so you have a buffer when rates rise again.

Questions this video answers

August 2019

Roughly between 0.3 and 0.5 percentage points off a home loan (examples: 0.25, 0.2, 0.25).

What have you done with your interest rate cut? The last two months, the interest rate has dropped and the banks have passed on some, if not all of that. Rate cut? Hey, it's Aaron from Diagnostics and Finance. Rate cuts are great things to look at when you're borrowing money. If you're saving money and earning interest and you don't have a homeowner, it can be a little bit more difficult. But let's talk about the homeowners for a second. If you've had a rate cut of 0.25 or 0.2 and then a point two and then a point two five, so you've roughly got between 0.3 and 0.5 off your home loan, what have you done with that rate cut? Have you kept your direct debits the same as they were before the rate cut? Are you paying more off your home loan? Are you putting the extra repayments into another debt that you want to get rid of? Rate cuts are great. The problem is, if you start spending the rate cut, you may not be getting ahead financially. If you've still got a substantial mortgage, it's probably good to keep your rate cuts inside your mortgage so that that would help pay it down. Just imagine if back in 2004 and 5 when the interest rates were like 9%, if everyone kept their repayments from 9% and now you're only paying 3.5 or a bit less, imagine how much your home loan would not be there. If you're starting out with a home loan and you were able to achieve your home loan back in March and now you've got rate cuts, think about keeping that savings inside your mortgage so that if the rates do rise in the future, you'll be able to accommodate that as well. So what are you doing with your rate cuts? Are you putting it back in your mortgage? Are you spending it? Are you putting it off a credit card or a personal loan or a car loan to be able to pay that off quicker, are you using it to buy other things? I'd be keen to understand where you're coming from. I know I've had a personal opinion in this video in regards to paying it off debt, but that's my job. Keen to hear from you where you are spending your rate cut. Alright, it's Aaron from Diagnostics and Finance. Have a great day.