How borrowers can save, even after the August RBA hold

The official cash rate will remain at a 14-year high for at least another seven weeks following the Reserve Bank Monetary Policy Board's latest meeting this afternoon.

In a decision that was widely anticipated beforehand, the nine Board members voted unanimously to keep the cash rate steady at 4.35%.

This marks the second rate hold from the RBA in as many meetings, following three consecutive rate hikes at the start of the year.

In its post-meeting statement, the Board stated that inflation is still too high and that it won't rule out the possibility of further rate increases if necessary.

"With monetary policy judged to be somewhat restrictive, the Board decided to leave the cash rate target unchanged while it assesses how the economy is evolving.

"The Board will continue to do what it considers necessary to bring inflation sustainably back to target, including increasing the cash rate target further if upside risks materialise."

Is now a good time to negotiate or switch your mortgage?

So, what does the hold mean for households? On the surface, a bit of stability, which, after rate rises in February, March and May, will be welcome news to some - particularly those with a mortgage.

While today's decision won't translate into relief for borrowers, another development in the market could be working in their favour.

Both NAB and Westpac have revealed drops in loan applications in recent months, with reduced borrowing power following earlier rate hikes and the impact of the budget's property-related tax reforms, playing a role.

Richard Whitten, money and home loans expert at Finder, says that given the drop in loan volumes, lenders may be more likely to want to keep hold of their customers.

"I do think existing borrowers looking at either negotiating a better rate, or refinancing, are the customers that lenders are heavily incentivised to try and keep happy.

"After all, it's much easier to keep an existing customer than to acquire a new one.

"That's provided that borrowers themselves are in a good position. People may find that their borrowing power is not where it was two years ago, for example, because their expenses have gone up - and not necessarily in line with their income."

What are the best home loan rates in August?

Whether a borrower is looking to negotiate a better deal on their existing loan or eyeing a switch to a new lender, comparing their current interest rate to the rest of the market can help.

This is all the more important given that, as Whitten explains, there's a significant spread in home loan rates from the cheapest to the most-expensive end of the market.

"On Finder, our broad average is close to 7.00% for variable rate mortgages at the moment, but that encompasses lots of different scenarios.

"Right now, anything around the 6.00% mark or under is a good deal.

"There's quite a few small lenders with rates under 6.00%, as well as a few larger lenders like Greater Bank, Bendigo Bank and Unloan (which is backed by Commbank) that have rates sitting around 5.80% to 5.90%."

Thinking about refinancing? Here are four things to consider

In a recent survey conducted by Compare The Market, one in four mortgage holders admitted they should be looking around for a better deal, but one in ten weren't sure where to start.

As Whitten lays out, while the rate attached to a loan is likely to be the most important factor to consider before refinancing, it's not the only one.

Here are three other things he suggests are worth considering when weighing up a switch:

• Fees: "The rate is going to be the main cost you'll want to consider, but any one-off or ongoing fees are also important - you don't want to be overpaying for fees."
• Offset account: "Another major consideration may be whether the loan has an offset account. Being able to put money in your offset can just be so beneficial - so much so that some people view it as more important even than their rate."
• App or online platform: "A point people often miss is convenience and whether a lender has a good app or online platform. An app that lets you manage your loan more easily and be engaged with your spending and saving can make a big difference."

Want to learn more about the refinancing process? Check out our article on how to refinance your mortgage for the first time for more information.

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