DYI mortgage cut: David Koch’s tips for homeowners to save as BA holds official rates

Homeowners can “DIY” their own interest rate cut, according to financial expert David Koch.

The Reserve Bank of Australia held off on any new interest rate cut today — with no relief on the way for homeowners expected until later in the year.

Economists and bond traders predict the central bank to leave the cash rate at 3.6 per cent when it wraps its latest monetary policy meeting on Tuesday, after inflation came in hotter than expected.

While homeowners did not get any official relief, Compare The Market economic director — and former finance journalist and Sunrise host — David Koch said there are ways for borrowers to create their own cuts.

“Go and find a cut yourself,” Koch told Sunrise on Tuesday.

“First of all, work out how much you’re paying on your home loan.

“The average variable home loan rate is 5.76 per cent — if you’re paying more than that you’re a mug.

“There are some (home loan rates) as low as around 5.3 per cent to 5.4 per cent, now that’s a $2000 difference over a year in repayments.

“There are big variations.”

Koch also said homeowners should look for two-year fixed rates, with some as low as 4.79 per cent.

“That’s almost 1 per cent below the variable rates — that (amounts to) four Reserve Bank interest rate cuts,” he said.

“You can save big money.”

The Reserve Bank has lowered mortgage rates three times since February, shaving more than $270 from monthly repayments for an average home loan of $600,000.

“In June, 65,000 homeowners refinanced their mortgage,” Koch said.

“Lots of people are doing it. If you’re not getting those rates, go and look for a better deal.”

A jump in the monthly consumer price index from 2.8 per cent to 3 per cent in August validated the Reserve Bank’s cautious approach in cutting rates, online property marketplace Domain chief economist Nicola Powell said.

No interest rate relief is expected now until at least November.

— With AAP