The savings have been even bigger for those able to sniff out the lowest mortgage rates on the market.
At the start of the year, the best rate was 2.69 per cent which meant monthly repayments of $1375. The best rate now is 1.99 per cent with a monthly repayment of $1280.
The Reserve Bank has signalled it is not expecting to increase official interest for at least 3 years.
Canstar group executive of financial services Steve Mickenbecker said bargain hunters with good credit levels had done exceptionally well, with the lowest rate in the market 1.77 per cent for a loan-to-value ratio of up to 60 per cent.
“Home loan rate cuts have been one piece of good news for borrowers in 2020,” he said.
There has been strong growth in fixed rate mortgages this year as buyers seek to lock-in record low rates.
The average rate on a three-year fixed mortgage has fallen from 3.15 per cent to 2.3 per cent, a difference of $130 a month or more than $39,000 over the life of the loan.
The best three-year fixed rate is 1.89 per cent, down from 2.69 per cent at the start of the year.
“Much of the interest rate action has been in fixed rates, with five-year fixed rates down as low as 1.99 per cent and two-year rates starting from 1.88 per cent. Even the big banks have joined the fixed rate frenzy, with rates as low as 1.99 per cent for four years,” Mr Mickenbecker said.
Low rates are expected to be the norm for coming years. The Reserve Bank has signalled it is not expecting to increase official interest for at least three years.
It’s been a much tougher year, interest-wise, for people with money. As banks have cut their mortgage rates, they’ve also slashed their savings rates.
Canstar recorded 529 cuts to savings rates across the year, split between regular accounts and bonus savings accounts.
The average regular saving rate was 1.12 per cent at the start of the year but it is now just 0.43 per cent. For a person with $10,000 in their account, the drop in interest equates to a $740 in compound savings over a decade.
The current inflation rate is 0.7 per cent, meaning a person holding cash is going backwards in real terms.
The average bonus savings rate, which are often introductory rates, have fallen from 1.47 per cent 0.75 per cent.
AMP Capital chief economist Shane Oliver said record low mortgage rates, coupled with government home-buyer incentives, income support measures and bank payment holidays, were boosting home prices at present.
But high unemployment, the collapse in immigration numbers and weak rental markets were weighing on inner city areas and units in Sydney and Melbourne.
Those with money were likely to be disappointed with their savings performances.
“Cash and bank deposits are likely to provide very poor returns, given the ultra-low cash rate of just 0.1 per cent,” he said.
Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.