With the unexpected cut in the cash rate by the RBA, there is increased focus on what is happening with interest rates. The banks, including all four majors, were quick to pass on the cash rate reduction but understanding what is happening with interest rates goes far beyond a bank’s Standard Variable Rate.

A look at the standard variable rates for the Banks shows an interest rate of around 5.7%, some banks a little cheaper, others a little more expensive. But this this not the entire story, all lenders offer discounts, generally under a package, with the amount being borrowed and the value of the property impacting on the discount being offered.

A discount of 0.7% is readily available, reducing the effective rate to 5%. However, this is not the end of the story. Lenders in chasing business are offering further discounts with effective rates on variable rate products being seen below 4.5%.

Discounting in the fixed rate space is even higher. Since the RBA announcement lenders have also moved on their fixed rates. We are currently seeing fixed rates as low as 4.14% for 3 years or 4.34% for five years.

Beyond discounts on interest rates lenders will also look at the fees they charge, lenders will waive package fees or offer refinance rebates, helping to further reduce the cost of a loan.

Understanding all the offers out there can be confusing, using a mortgage broker can help take some of the noise out of the process. Mortgage brokers receive commission paid by the lenders. They will come to you and take care of all the paperwork, and can really add value for those who are self- employed. Speak to your Mortgage Broker today, they may be able to save you thousands over the life of your loan.