The recent move by the Reserve Bank of Australia to cut the cash rates by 0.25% would have given a much needed boost to homeowners. Unfortunately, three out of the big four banks have decided to only pass on a paltry 0.10% of the rate cut - and NAB is pocketing all of the rate cut savings.
It's disappointing to see the major banks holding off passing the savings to consumers. But as borrowers, you hold the real power when it comes to your mortgage.
The only way to ensure you have the best loan for you is to regularly reassess it. Does it still offer the competitive rate you once have? Does it still fit your lifestyle and financial circumstances? Does your lender provide the service you need?
You might find that you've already outgrown your mortgage and you need a change. The question is: Should you stay with your lender (who may refuse to pass on future rate cuts) or go and take your chances with others?
As always, mortgage decisions should not be a knee-jerk reaction based on a single event in the market. As we explain in the article on "Refinancing", there are some massive costs involved in breaking your loan and switching to another lender. You need to make sure you do your sums and be confident that you will come out ahead financially if you do decide to refinance.
Another vital factor to consider is the way you structure your loan to maximise your interest savings. In our article on "Structuring your mortgage" we look at different ways you can structure your loan and show you how to get it right.
Whether you're just starting out your journey towards homeownership or if you're in the market for your second or third loan, it's important to get back to basics and understand all your options before committing. Read our special report on "How to choose the best home loan for you", to help you decide which loan is best for you.
Despite the current dominance of the banks at the moment, competition is alive and well in the mortgage market. We can't stress enough the need for you to shop around and look outside the banking circle. You'd find that there are still some reputable and stable non-bank lenders out there offering competitive products at equally competitive rates.
Staying loyal with your lender doesn't make sense if they don't share your sentiment. At times like this, the best thing to do is vote with your feet.