How to get a loan reduction – today

Loans-loanThe Reserve Bank has revealed the reasons behind its August rate cut – and after reviewing their position, I’m not sure investors should be hanging out for further rate cuts.

The good news is that when Governor Glenn Stevens announced an interest rate cut of 25 basis points, he said “prospects for growth were positive”.

This is definitely a positive sign, as we want our economy to grow and prosper.

However, he also noted that there “was room for stronger growth, which could be assisted by lower interest rates.”

That explains why he made the decision to slice a quarter of a percent from the official cash rate.

But what mortgage holders want to know is: Do interest rates have further to fall from here?

Senior economist Matthew Hassan from Westpac believes the RBA is in a ‘watch and see’ mode and I have to say I agree.

“The Board is almost certain to keep rates on hold in September,” he says.

“We expect that downside risks around economic conditions will diminish sufficiently in coming months to see the Bank retain a more patient approach to its inflation objective. Accordingly, we expect that the Bank will keep rates on hold over the remainder of 2016 despite an apparent easing bias.”

Whether we do or don’t have any further RBA-imposed rate cuts in 2016 (or even into early next year), one thing is clear: you don’t need to wait for a rate cut to have a reduction on your mortgage.

If you haven’t spoken to your bank over the last 12 months, you need to call your bank or broker today to ask them for a rate reduction.

That’s right – ask them outright for a discount. You will be surprised at what your lender will do to keep your business and you may save thousands of dollars in just one phone call!

I have a client who called her bank this week, which happened to be one of the Big 4, and requested a rate reduction. Her investment loans dropped from 4.65% to 4.37% – in one quick phone call.

What have you got to lose?

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