In a world of economic stimulus packages, social distancing and panic buying at the grocery stores, this is the new reality of the COVID-19 era. With many businesses and services forced to close, many Australian’s are feeling it when it comes to their finances. As the media speculate overwhelming amounts of information, it can be hard to know what the impact means for you. If you’d like to find what exactly low interests rates mean and how they might affect you keep reading!
Interest rates on loans can change from time to time. So what makes an interest rate rise and fall? Now the actual process is much more complicated, but essentially interest rates fluctuate mostly as a result of what the Federal Reserve does to keep our economy stable.
In this case the coronavirus has left countless people jobless, sick or strictly confined to their homes. Success in containing the virus comes at the price of slowing economic activity. As a result, a large percentage of the population is unable to make loan repayments and pay for expenses. In order to stimulate economic growth, on March the 19th, the Reserve Bank of Australia announced an emergency interest rate cut that reduced the cash rate to 0.25 per cent. With interest rates down this might be a good time for you to renegotiate your interest rates or find a new lender.
With interest rates lower than ever before, lending has become more competitive meaning borrowers can get a better deal from their current lender if they know what to ask and how to ask for it. While it may seem like banks are holding all the cards, lending customers form a huge part of a bank’s business model and it is in a lenders interest to try and retain customers. So if you have a variable interest rate loan you might be able to negotiate a lower interest rate with your lender. If that’s not the case, it might be time to refinance.
Some borrowers might be wondering whether there is a possibility of mortgage rates dropping even further, however these are the lowest rates Australia has seen in history. Refinancing is an effective way to take advantage of a low rate environment. It’s simple: a lower interest rate means lower repayments. Lower repayments helps you save money. This means you’ll have more cash for loan repayments, investing or renovations. It is vital now more than ever to look at your mortgage and property strategy to figure out how you might be able to cut some costs. So for those who are looking to take action now, mortgages have never been cheaper.
If you’ve decided that refinancing is the right option for you then you will need to require a whole new home loan application. If you aren’t sure where to start, why not use a broker to assist you? An experienced broker could help you find the best rates going with more flexibility than your existing loan.
Despite the uncertainty of the world crisis, it is a great time for Australians to take advantage of the current lending market to secure themselves a great deal on their home loan. With the rates in place, banks and lenders are starting to pass on the reduction to their interest rates. Ultimately, homeowners could find that the reductions in rates could assist them in affording higher value properties. On the other hand, for prospective buyers, this may assist them by getting into the market.
For homeowners with a mortgage, this is an important opportunity to find the best rates possible. However, it is important that you do some research to compare rates and get a feel for the market. For instance, really cheap loans may not include features like an offset account. Every situation is different and the right loan will depend on the individual’s circumstances. If you are looking for a financial solution, Diversifi can help you switch to an affordable home loan. Whether you’re seeking a first home buyer loan, car finance, or simply want a better mortgage rate, we can help.
You may already know us as your short term lender however we are proud to announce that we are working alongside Diversifi. We’ve chosen Diversifi as our brokerage of choice because we believe they will efficiently find a finance solution to match your needs using state-of-the-art software. Just like us, they offer quick, easy applications and flexible loan terms.
In such uncertain times, the best thing you can do is talk to lending experts. Diversify will be more than willing to organise a time to talk you through your options. Talking to an experienced broker could help you make the most of interest rate drops based on your individual circumstances.
Diversifi is one of Australia’s leading finance aggregation companies. They are an established and highly awarded finance Broking Company, supported by Choice Aggregation Services. At Diversifi, their team of brokers are highly experienced in the finance sector. With each team member having ongoing training in addition to holding Australian Credit Licences, you can feel confident in knowing you’re receiving valuable advice.
Want to read more? Check out our guide to getting a car loan.
Are you wondering how to save money while self-isolating? Jacaranda’s has the details!
Young entrepreneur Daniel Wessels is the CEO and Founder of Jacaranda Finance. Although only in his early thirties, Wessels’ determination and adaptability has led him to successfully pioneer a range of other enterprises both here and abroad.Read More
Jacaranda is 100% online. So, we do not accept applications over-the-phone. However, our friendly team is more than happy to answer any questions you may have.