What does the RBA rate cut mean for first home buyers? 3 predictions
With news of an RBA rate cut, we look at what's next for first home buyers
1. Getting a home loan may be easier
One of the big benefits of the cash rate cut is that locking in a home loan may be easier.
A lower interest rate usually means lower repayments1.
Although lenders still have strict standards, this can make home ownership more affordable overall.
This could be good news for Australians who've been waiting for an opportunity to buy their first home.
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2. Growing savings will be tougher
A cut in the cash rate is designed to encourage spending and discourage saving across Australia2.
Interest rates on home loans go down – but the interest rates on savings accounts, term deposits and similar savings tools tend to drop too.
This doesn't have to mean you're cut out of buying a home, though.
Working with a broker and leveraging tools like first home buyer concessions and Lenders Mortgage Insurance (LMI) can help with the process.
You can find a rundown of our top tips for buying a home right here on Finder.
3. Having good financial habits will still be key
No matter how much the interest rate drops, lenders will always be looking at your overall financial habits.
If you're looking to buy, it's worth looking at getting your finances in order. Your broker should be able to assist with this process.
Some of the factors lenders consider include:
- Your income
- How long you've been in your current job
- Your savings
- Your existing debt
- Your assets
- Your credit score
Every lender is different, though – this isn't an exhaustive list.
It's also important to be prepared for interest rates to rise again. MoneySmart recommends calculating your costs based on if interest rates were to rise by 2%3.
Get more info from Finder Experts about the RBA cash rate. And as part of your buying journey, make sure you shop around for a cheaper home loan rate.