So… elephant in the room.
You already know this but let’s get it out of the way in case you just woke up from a coma.
The RBA dropped rates by 0.25% yesterday and nearly every single lender has matched it.
I was genuinely shocked that they passed it all on as their track record isn’t flash.
But they did, kudos to them.
Now. you're gonna get a heap of people giving advice or feedback about “what that means for you”.
But the truth is, they don’t know what that means to you, do they?
Maybe:
You’ve been living pay check to pay check and not being able to put enough food on the table for you, your kids or your pets, well here’s another $100pm to help
You’re sick of working and would love nothing more than to take 2yrs off your mortgage (by keeping your current repayments)
Private school fees are crushing you but kids still have ages to go. This might help you keep them in that school, with their friends
You can now afford to buy your first home because lender affordability just went up
You might be able to refinance to a better deal when previously you were just short of borrowing power (no more mortgage prisoner for you)
You can finally save for a holiday
You can finally give a little to charity, your church or someone in the street
Or maybe, just maybe you can buy yourself some damn shoes.
You get the point. This rate cut means different things to different people.
You’ve endured almost 5 years of high interest rates, with not a single rate cut. BUT you are still here.
AND for many of you, you’ve never ever seen a rate cut at all.
Let’s be clear about one thing though re: inflation coming down. Our government hasn’t done this. You have. They have been spending crazy amounts of money they don’t have. That’s what kept inflation high. So don’t listen to the narrative. You endured it. You.
My message to everyone is simple. Be intentional with this rate relief, as small as it might sound.
Because this is YOUR money saved and no longer the bank’s to keep.
We are likely to see a couple more in the next year so let’s get on the front foot.
It is worth mentioning that by putting that $25 per week back into your home loan you would be saving $56k over 28 years. That’s a lot of dough but maybe you’re going through a season where a small purchase could be the difference between being mentally even able to get through this year, let alone 28. Could you catch up in a year once you navigate this season? Only you can say.
So instead of giving you advice, here’s what I am doing:
I have an offset account set up against my home loan labelled “EXTRA PMTS DONT TOUCH”. This is where I put additional repayments into currently.
Today I have just increased that direct debit to match the savings from the rate cut.
In other words I am paying my loan down by an extra $25* per week and therefore choosing to pay it off another 2yrs earlier.
The question is “what are you gonna do about it?”
If you want to spitball that, I’m here and definitely won’t judge you for those new pair of kicks, taking your mum to dinner, that holiday you’ve been needing OR paying your loan off a few months earlier.
Please let me know, I’d love to hear, or perhaps even send me a cheeky postcard.
You do you.
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