Kochie reveals how to give yourself a rate cut if the RBA holds

David Koch says a tiny bit of effort can save thousands. Picture: Jono Searle

The August inflation reading of 3 per cent all but confirmed there would be no mortgage relief at the RBA’s September 30 meeting, but that doesn’t mean borrowers can’t get themselves a rate cut, according to former Sunrise host David Koch.

Kochie, now economic director for Compare the Market, said that while rates decreased by 0.25 per cent to 3.60 per cent in August, leaving average borrowers with a $660,000 loan around $105 better off each month, it was becoming increasingly unlikely that the RBA would lower rates in September.

“The latest monthly CPI data shows headline inflation rose 3 per cent. While this is only a monthly figure, I wouldn’t be hedging any bets that we’ll see rate relief at September’s board meeting,” Mr Koch said. “The RBA will no doubt be taking a ‘better to be safe than sorry’ approach here.

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“They’re walking a tightrope right now, balancing between lowering rates to help homeowners who have been hammered over the past few years and preventing inflation from creeping back outside the target range.”

He added that further relief would largely depend on quarterly inflation data to be released in October.

“(The RBA will) be looking very closely at things like the rate of employment and export demand. But there’s still a lot of uncertainty around the global economy right now, so it’s very touch-and-go.

“But providing key factors remain in the RBA’s target range, we may see some further relief in November. Wouldn’t that be a nice Christmas present?”

MORE:Big 4 banks make rate cut prediction

RBA Governor Michele Bullock is not expected to cut rates in September. Picture: Philip Gostelow

While most economists forecast there will be at least one cut before the end of the year, Mr Koch said savvy borrowers may be able to create a discount of their own.

“We’ve seen several banks, including CBA and Westpac, start to offer fixed rates with a four in front. Many variable rates on the market are hovering around the mid-fives,” he said. “If you’re looking for certainty around your repayments for a set period, a fixed-rate contract could be worth considering. Of course, it means that if rates reduce further you might not be able to take advantage because you’re locked into an agreement.”

Mr Koch also said that some banks were offering cashback offers in the thousands for borrowers who refinance. Meanwhile, Compare the Market analysis shows there can be 0.48 per cent difference between some advertised rates.

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“That difference could represent a saving of $201 on monthly repayments, or $2412 annually, for someone with an average loan of $660,000,” Mr Koch said. “Of course, these competitive rates are typically reserved for new customers, so you need to do a bit of research. The best rates might not be with your current lender, but a tiny bit of effort could leave a lot of money in your pocket.”

Canstar data insights director Sally Tindall agreed that there was no point waiting for the RBA to save money for you.

“While an RBA cut is extremely unlikely next week borrowers should not sit idle, Ms Tindall said.

Sally Tindall suggests making sure your rate is below average.

“Over the last few weeks, we’ve seen lenders jostle for a competitive position, and it’s not just the smaller banks playing this game.

“If you’re an owner-occupier paying down your debt, know that the average variable rate is currently sitting at around 5.53 per cent. If you’re not under this mark, ideally well under, then it’s time to ask yourself why.”

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