Why the rate cut doesn't feel real
The news is making a big fuss about rate cuts, but my loan interest rate hasn't changed and my deposit rate has actually fallen further. I understand there's a lag between the policy rate and the rates people actually feel, but I wonder if it should be this hard to feel the difference.
In the end, I can't tell whether the system favors people who locked in a fixed rate on their loans, or whether I should switch. How is everyone responding?
5 answers
When you hear about rate cuts in the news, that’s the base rate. My loan interest is the market rate plus a spread, so it doesn’t adjust right away. Structurally, banks lower deposit rates faster and loan rates more slowly, so it’s normal that you don’t feel the effect.
The people who are smiling aren't the ones who locked in a fixed rate — it's the ones who locked in before rates went up. Locking in a fixed rate at this point could actually end up costing you. Before you switch, run the numbers on the prepayment penalty and the total interest left on your remaining term.
Me too lol. From the news alone, it looks like everyone’s making money, but when I check my bank account, it’s exactly the same.