Aussie households with $1m mortgage to reap $456 in monthly savings compared to start of the year if RBA cuts rates
The central bank is widely expected to cut the cash rate for the third time this year.
Another 0.25 per cent drop in July will bring the cash rate to 3.6 per cent and put hefty savings back into household budgets.
Analysis from comparison site Money.com.au found Australians with a $1m home loan would save an extra $150 in monthly repayments if the RBA cut rates in July.
This would bring the total savings to $456 since the central bank began cutting this year.
Money.com.au's mortgage expert Debbie Hays said a third cut would deliver substantial financial relief for millions of Aussies that continue to struggle with price pressures.
'Based on conversations we've had with borrowers, it's this third rate cut — the rule of three in action — that they believe will finally bring meaningful relief to their household budgets,' Ms Hays said.
'After rate hikes in 2022 and 2023, and a sustained period of higher repayments, many are now watching closely to see if and when their lender passes on the cut in full.
'It's an additional welcome boost at a time when people are receiving their tax returns — any extra breathing room in the budget is being gratefully received right now.'
While Australians with a $1m home loan will reap hefty savings each month, households with smaller mortgages can also expect solid relief.
A household with a $600,000 home loan will save $273 per month compared to the beginning of the year if the RBA cuts on Tuesday, while those with an $800,000 loan will save $364.
It also comes as a boon for first home buyers struggling with high borrowing needs - but a cut could also boost house prices, Ms Hays said.
'For those still waiting to enter the property market, a third rate cut could boost their borrowing capacity by up to $50,000 — depending on the lender,' she said.
'While that might open the door to an extra bedroom or a more desirable suburb, it's also a double-edged sword, as it will fuel higher property prices and increased competition from other buyers with the same boost in borrowing power.'
The likely upcoming rate cut follows the RBA gradually hiking the cash rate from 0.1 per cent in May 2022 to 4.35 per cent in November 2023.
Rates were held for almost a year and a half while the central bank combatted sticky post-pandemic inflation.
Trimmed mean inflation - the RBA's preferred measure which examines the middle 70 per cent of price changes - dropped to 2.4 per cent for the 12 months to May.
The recent quarterly inflation figures showed trimmed mean inflation fell into the RBA's 2-3 per cent target band for the first time since 2021.
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