Kin’s Money

This week the National Australia Bank (NAB) have committed to matching any cut in official interest rates next month. So far they are the only bank to do so, despite continued warnings from the government. Apparently the banks see the government as a toothless tiger in this scenario, and feel (probably quite rightly) that there is nothing the government could actually do that would encourage them to follow the NAB’s lead.

If your bank does pass on any interest rate cuts made next month, it is important to remember that those cuts will not necessarily pass on to you unless you ask for it. From the Canberra Times today:

MORTGAGE holders struggling with the rising cost of living will have to apply individually to their bank to have their repayments reduced, even if the lender passes on an interest rate cut.

This is because most Australian mortgage holders choose to make repayments in excess of the minimum required and these repayments do not automatically change when interest rates do.

So if you’re holding your breath for next months expected interest rate cut, remember to contact your bank and apply to reduce your repayment. Or, you could leave your repayments as they are, and simply pay off your loan quicker.