9 Ways the Latest Rate Cuts Can Save You $10,000 a Year
Interest rate cuts are finally giving homeowners breathing room—but how you use the savings can make a big difference.
3 min
After years of rising repayments, Australians are finally seeing interest rates ease. February’s 0.25 percentage point cut shaved $76 a month off a $500,000 mortgage repayment, but the total savings could be more than $1,000 a year. With that extra money now flowing through, smart moves can turn small monthly savings into thousands over time.
1. Refinance your loan
Lower rates mean better borrowing power and increased competition by lenders for customers. As such, it’s a great time to consider refinancing.
You could double (or more!) the size of this rate cut – especially if your pay recently increased or your costs decreased, such as no more school fees after a child graduates.
Potential difference: $151.42 monthly savings by doubling the official rate cut to 5.55 per cent on a $500,000 mortgage.
2. Keep repayments the same
Just because rates have come down doesn’t mean you have to pay that new amount.
If you can afford to, keep your repayments the same. The extra amount you’re paying will chip away at the principal loan balance faster, meaning the amount you owe decreases and less interest accrues in future.
Potential difference: $26,588.07 saved over 25 years on a $500,000 mortgage. Over time, the savings would be 2.37 years of interest saved, which is over $60,000.
3. Pay down debts
Falling mortgage repayments mean more money to put towards paying down other debts.
Start with high-interest debts first, such as credit cards or car loans – these balloon quickly if you fall behind and adversely affect your ability to refinance your mortgage or get a new loan.
Potential difference: $151.43 monthly savings by clearing a $1,634 credit card debt with average 20.08 per cent interest rate.
4. Reassess savings accounts
The flip side of falling interest rates is that savings accounts and new term deposits become less attractive.
It may be worthwhile to reinvest your savings somewhere with higher earning potential. This becomes increasingly important the more interest rates fall. You should also consider tax though.
Potential difference: $1.68/month is small, but this also excludes compound earnings investing $76.15 monthly at 7.5 per cent sharemarket returns vs 5.25 per cent in a high-interest savings account.
5. Top up your super
Your superannuation balance will grow faster with more money going in and compound earnings between now and retirement. Plus, there are generous tax breaks for making voluntary super contributions.
Potential difference: $23.00 extra per year (excluding compound earnings and tax savings which is the bigger saving) contributing $76.15 per month at average 8.1 per cent returns.
6. Upskill to boost your income
Extra cash can be used towards study/qualifications to boost future earnings. Or you could start a side hustle that could deliver additional income or even allow you to earn more than your current job pays.
Potential difference: Just a 5% increase on the average $1,396 weekly income delivers an extra $3,629.60 per year. Self-education and self-employment costs are tax deductible too!
7. Invest in yourself
Investing in your health (physical and mental) has longer-term benefits: lower medical bills, fewer sick days, reduced risk of forced early retirement or premature death.
Potential difference: Thousands of dollars and a long, healthy life vs a shorter lifespan and/or poorer quality of life.
8. Boost your emergency fund
It is easier to build an emergency fund – cash set aside for a rainy day – in smaller, regular amounts than big lump sums. Rate cut savings are ideal for this, as you’re already used to living without this money.
Potential difference: Immeasurable if it’s the difference between having money set aside or having nothing, should disaster strike!
9. Donate to charity
If you’re going to spend your rate cut money no matter what, why not donate it to charity.
It will do some good for the world and give you the satisfaction that comes from helping others. Plus, you can claim a tax deduction on donations over $2.
Potential difference: You can receive a refund of up to 45 cents on every dollar donated, depending on your tax bracket.
As the above points show, there are plenty of ways to make rate cuts work even harder for you. The biggest difference will be whether you take action or let the savings flutter away
Helen Baker is a licensed Australian financial adviser and author of the new book, Money For Life: How to build financial security from firm foundations (Major Street Publishing $32.99). Find out more at www.onyourowntwofeet.com.au
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The federal budget has rattled property investors. But the biggest mistake isn’t the tax changes, it’s the conclusion many are drawing from them.
2 min
The recent budget has forced a reckoning for property investors.
Negative gearing now restricted to new residential builds, the CGT discount gone and on paper, the numbers look different.
And many investors are responding by pivoting toward yield, prioritising cash flow over capital growth in a way that property strategists say misses the point entirely.
“The debate has shifted to yield versus growth as if they are opposing forces,” says Abdullah Nouh, founder of Melbourne-based buyers’ agency Mecca Property Group. “But that framing is itself the mistake.”
Nouh, who works with high-net-worth families and investors on long-term acquisition strategy, argues that capital growth remains the primary driver of genuine wealth creation and that the post-budget environment has made quality assets more important, not less.
The numbers make his case plainly. An additional $500 per week in rental income is welcome. A prestige asset appreciating by $1 million over a market cycle is transformative.
These are not equivalent outcomes, and portfolios built around yield at the expense of location and land value tend to generate income while wealth stands largely still.
The more nuanced shift Nouh is seeing among sophisticated investors is a move toward assets where both outcomes can be engineered simultaneously – established homes on substantial land in quality locations, where the existing dwelling can be repositioned, rental returns improved, and the underlying land value compounds independent of what sits on it.
For investors with existing equity, commercial property is also entering the conversation in a more serious way.
Prestige industrial assets, medical centres and long-leased essential retail offer income profiles that residential property in most capital city markets cannot currently match: longer lease terms, tenants covering outgoings, and greater predictability than the residential tenancy cycle.
“The investors who build lasting wealth are rarely the ones who chased yield or growth exclusively,” says Nouh.
“They are the ones who built a strategy they could sustain – one that generated enough income to hold quality assets through multiple cycles while those assets compounded in value.”
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