This is a question we’ve been getting a bit lately, so today we’ll break down why it’s not a futile effort.
Let’s say you refinance your variable rate home loan this month from 3.5% down to 3%. If the RBA raises the cash rate by 0.25% next month, and your bank follows suit, your interest rate will then be 3.25%.
But if you choose not to refinance (and your bank follows the RBA’s lead) it’ll be 3.75%.
This 0.5% gap would remain for all subsequent upcoming interest rate rises – so long as the banks increase their interest rates in lockstep with the RBA.
Clear as mud?
If you’re still unsure, give us a call and we’re happy to explain further!