At its meeting today, the Reserve Bank of Australia decided to leave the official cash rate on hold at 4.25%
The RBA's decision today to keep the cash rate steady at 4.25% comes as bad news for the nation's homeowners who were hoping to get some relief from the out of cycle rate hikes passed on by Australia's major lenders in recent months.
The RBA board's view was the setting of monetary policy was appropriate with "growth expected to be close to trend, inflation close to target and lending rates close to average."
The Feb / March rate increases were the largest out-of-cycle rate changes in the Australian home loan market since the Global Financial crisis started, with lenders increasing their standard variable rates by an average of 10 basis points - even more than the original ANZ rate change of 6 basis points.
One quarter of lenders bucked the trend and kept their rates on hold to capitalise on customer dissatisfaction with the Big 4 banks. Of the lenders to leave rates on hold, two thirds were mutuals such as Teachers Mutual Bank and Community First, and one third were online lenders and challenger banks such as MyRate and ME Bank.
It is unlikely that homeowners will be hit with another big round of rate hikes in April, but all eyes are squarely on ANZ to see if they make any changes to their monthly rates decision on Friday the 13th!
The stable cash rate appears to be good news for the nation's savers. March kicked off a new round of competition for deposits, with the volume of savings account rate increases outpacing decreases for the first time in 2012.
Commonwealth Bank, Westpac and St George were among the providers to increase savings rates in an effort to compete more effectively against the direct providers and challenger banks who are aggressively acquiring market share right now.
Term deposit rates for longer terms are also on the rise, with 15 providers lifting their one year term deposit rates in March by an average 29 basis points.
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