The Reserve Bank’s decision to make an out-of-cycle cut to the official interest rate on Thursday 19 March has left some borrowers exasperated their lenders haven’t passed on the 0.25% cut in full.
Not long after the RBA announcement, for example, Commonwealth Bank announced it would not be passing on the rate cut to standard variable rates. Instead, the bank announced a massive 100 basis point interest rate reduction for all existing small business loans. Australia’s largest bank has made this decision to try and provide some assistance to small business, which desperately needs a break. It is a move that will help those Australians who need the help most, especially as most commercial loans are tied to SME owner’s homes.
This situation aside, the critical message to borrowers is that the government has jumped in to back lenders as they did in 2009 during the GFC to ensure there is plenty of finance for those seeking to borrow money.
Nonetheless, if you have problems such as a loss of income or are now out of work, be sure to contact a finance broker such as Our Broker for assistance. A broker can advise you how to talk to the banks about your changing circumstances. The banks have been given a pot of money by the government that allows them to provide cheaper finance to residential mortgage customers feeling the pinch.
A broker is available to help you through the troubled waters we’re currently experiencing. It might be that you can take a moratorium on repayments for a period or seek an extension of payment term. It’s in the interest of the banks to help borrowers through this period rather than foreclose them.
The banks also want to avoid a wide-ranging fire sale of distressed properties because that outcome devalues the assets, they hold on their balance sheets. The government is also incentivising the banks to help customers through the next 3-6 months.
If you require some assistance with managing your home loan obligations, please call Our Broker on 02 8232 0327.
Prepared by Raine & Horne Pty Limited for general information purposes only. Information current as at 27 March 2020 and we will reserve the right to update this content as more news comes to hand.