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Reserve Bank increases the cash rate

  • Reserve Bank raises cash rate by 0.25%
  • 11 out of 16 economists predicted it
  • But what will mortgage lenders do?

The Reserve Bank of Australia has raised the official cash rate yet another 0.25%, to 4.00%.

Eleven out of 16 economists can't be wrong! A survey by AAP last week found that two thirds of economists surveyed tipped a rate rise today. However after last month's surprise stand-off by the Reserve Bank it couldn't have gone any other way. This is the picture that the Reserve Bank governor Glenn Stevens painted in a recent speech given to the Standing Committee on Economics. With unemployment being at a 9 month low, the inflation rate sitting nicely within the RBA's target range, and the economy continuing to recover from the recent downturn, we should see some consistent interest rate increases by the Reserve Bank over the next year which will then hopefully plateau by mid 2011.

Mortgage
lender
Old
rate
New
rate
How
much
passed
on?
Naughty
or
nice?
AMP 6.69% 6.94% 0.25% thumbs up
ANZ 6.66% 6.91% 0.25% thumbs up
Aussie 6.44% tba tba tba
Bank
of
Queensland
6.76% tba tba tba
BankWest 6.55% 6.80% 0.25% thumbs up
Bendigo
Bank
6.70% tba tba tba
Citibank 6.88% tba tba tba
Commonwealth
Bank
6.61% 6.86% 0.25% thumbs up
CUA 6.37% tba tba tba
Homestar 5.88% tba tba tba
HSBC 6.49% 6.84% 0.25% thumbs up
ING
Direct
5.94% 6.19% 0.25% thumbs up
ME
Bank
6.69% tba tba tba
MyRate.com.au 5.88% tba tba tba
NAB 6.49% 6.74% 0.25% thumbs up
RAMS 6.48% tba tba tba
St
George
6.68% 6.93% 0.25% thumbs up
State
Custodians
5.64% tba tba tba
Suncorp 6.69% 6.94% 0.25% thumbs up
Westpac 6.76% 7.01% 0.25% thumbs up

Will the banks be making smoothies this month?

So the RBA increased rates by 0.25% this month, but what will the Big 4 banks do? After the Westpac debacle in December, it will be unlikely that any bank will increase their rates by more than 0.25% but you can be sure that most if not all will be increasing their rates by the maximum. Last month we heard that some of the Big 4 were going to keep their interest rates where they were even if the RBA raised them.

Mozo’s crystal ball says that all the banks will be hoping to hold off their announcements as long as possible, but that one of them (most likely NAB) will jump out and announce an increase to match the RBA’s 0.25% increase. There will follow a long silence, while all the banks that had considered a bigger increase wait until our attention has moved on to something else – Saint Patrick's Day, Peter Garrett, Easter. There’ll be lots of 0.25% increases, a few greater than that, and none less than that. Let’s see how good our crystal ball is!

Mozo will keep you informed

But whatever the banks do, and however quick or slow they are in making announcements, Mozo has a team on the case, chasing down the rates as they happen. In fact, we often have them before they happen – showing home loan rate changes that have been announced even before they come into effect.

How much will your home loan repayments change? Try Mozo's free online rate change calculator.

This table will show changes to standard variable rates as they become known, and you can compare rates in detail (as well as fees, features and customer ratings & reviews) by clicking on the links below.

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