Refinance and rate cuts

My fixed period for owner occupier property with P&I is about to end and moving into a new lender. I am planning to go ahead with variable rate. My question are:

1. I have found 3.59% variable rate. Does this sound good for this type of loan or should I shop around? I know this depends on other factors but just in general.

2. With the variable rate, if rate cuts come in the near future, will my rates will also by default reduce? Or should this be mentioned in the loan contract? Seems basic question but didn't know. So appreciate any suggestion.

 

1. It’s a good rate - as you’ve mentioned though, rate is only one aspect

2. Rates don’t automatically drop according to RBA drops. It’s up to the lender to pass on rate cuts or not

 

Lenders won't contract to pass on RBA rate cuts.

 

Yes, the one i am looking at is with one of the online ones...400k and 70%LVR.

 

How about if the lender drops interest rate in the near future? Will they pass it to me? I thought they would do with a variable interest.

 

Lenders usually pass on some/all of a rate cut onto borrowers. Typically given the incentives of banks, larger attractive 'front end' (new customer) pricing strategies are made with higher existing customer pricing. Some lenders use bait type rates to attract customers and then raise rates to existing customers over time (one way to do this in this environment is to pass on less of the rate cut to existing borrowers).

Nonetheless, a 3.59% rate is sharp if thats all you're looking for. Its possible some of the potential June rate cut may already be priced into that variable rate (unsure).

 

They won't contract for that either. What has been happening over the last few years is that lenders will offer new customers a lower rate than for existing customers