Brokers urged to act
Pepper Money intends to reduce the variable interest rate on existing residential, commercial, construction, and SMSF loans by 0.25% yearly from 5 March, making the non-banking leader the latest to pass through Reserve Bank of Australia (RBA)’s decision to lower the official cash rate by 0.25%.
Each of the Big Four has also opted to instantly slash their variable home loan rates by 0.25%, while a swathe of non majors, including Bank Australia, Bank of Melbourne, ING and Resimac, will pass through the savings from early March.
Though widely expected by the market, the RBA’s decision to cut rates “is a step in the right direction”, said Pepper Money’s chief executive Mario Rehayem. “While many households continue to face financial challenges, today’s rate cut will help ease some of the pressure and provide much-needed relief.”
According to the Australian Bureau of Statistics, the average Australian mortgage stood at $642,121 as of September 2024, with owner-occupier interest rates averaging 6.1% as of December 2024.
Rehayem said that for a $600,000 mortgage at 6.1% interest, the 0.25% reduction could result in savings of approximately $96 per month and $1,156 per year.
“While it may seem like a modest saving, it can make a meaningful difference, especially when combined with other cost-of-living pressures,” he said.
Rehayem also urged mortgage brokers to take a proactive approach.
“For mortgage brokers, now is the time to engage with clients and review their current loan. It’s important for brokers to be proactive and reach out to existing customers, help them understand what this rate cut means for them, and conduct home loan health checks to ensure they’re on the best possible rate.”
While welcoming the rate cut, Rehayem emphasised the importance of customer support, encouraging borrowers facing financial hardship to reach out.
