How to make the most of record low home loan rates

With the RBA taking the knife to the official cash rate for the first time since August 2016, it's time for consumers to cash in.

On average, variable home loan rates are at a historic low of 4.06%, which means there's never been a better time to be in the market for a home loan.

If your lender has passed on the official cut in full, without lifting a finger as an owner occupier you'll be $58 a month better off.

But, if you really want to save you might need to do a little shopping around and here's why.

Within minutes of the RBA decision to slice 25 basis points off the official interest rate, lenders were lining up to fight for your home loan business.

One-by-one smaller lenders started to pass the rate cut on in full effective immediately, offering significant reductions in monthly repayments for their customers.

While they might not be as well known as the 'big four' banks, if you're wanting to reduce the time it takes to pay off your mortgage, their names and rates are worth remembering.

Take Reduce Home Loans that is offering an incredibly low 3.19% rate or Homestar's 3.24% variable rate loan. Both rates are hard to go past.

Then there's Mortgage House offering 3.29% and Athena offering 3.34%.

Before you scratch your head trying to work out who these lenders are, it's worth remembering there's nothing to fear from small lenders. The only thing you'll give up by leaving the top end of town is an opportunity to pay a higher interest rate.

Enter the 'big four' banks. After all their trials and tribulations of recent years, customers could have been forgiven for thinking they would have been falling over themselves to pass any rate cut on in full without delay.

Unfortunately, if you are a big bank customer that's not the case. CBA, ANZ, NAB and Westpac are all delaying the date their variable interest rate cuts take effect. Collectively, the delay will see them rake in $108.8 million.

In simple terms, that hefty sum is the amount their customers are missing out on over the next few weeks.

If that isn't enough encouragement for you to start shopping around for a better home loan deal, ANZ and Westpac are only passing on some of the official rate cut to their customers.

A move that will see them collectively pocket $193 million in extra interest over the next 12 months.

So, if you're in the 80% or so of the residential mortgage market that still banks with the 'big four', listen up - it's time to move your money.

Think of it this way, the 'big four' banks' delay in passing on their rate cuts, and ultimately reducing your repayments, is an open invitation for you to seek out a better deal.

Find out if your lender has passed on the official rate cut in full

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