What does the RBA have in store for February - and the rest of 2018?

By Kelly Emmerton · · 2 min read
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The Reserve Bank board is set to have its first meeting of 2018 next week and although there have been predictions of a rate rise this year, Mozo’s Peter Marshall has said a change in February is unlikely.

The RBA has been sitting on its hands for a while now, with no changes to the official cash rate since August 2016.

Official rate rises have been even rarer in Australia - in fact, the last one was seven years ago, in November 2010. But according to Marshall, the low rate environment can’t last forever, and 2018 might just be the year that breaks the downward trend of Australia’s official cash rate.

“The RBA have already said they consider the ‘new normal’ cash rate to be 3.50%, which is quite a bit higher than the 1.50% we’re sitting on now. So they’ve already signalled a desire to start pushing the cash rate higher in the future,” said Marshall.

RELATED: Best home loans for January 2018: Mozo Editor’s picks

Despite that, conditions will have to be right before the Reserve Bank makes a move. Key economic indicators such as wages, employment numbers, inflation and consumer confidence levels need to start moving in the right direction to make a rate rise possible in 2018.

All this takes time, which means a February rate change is more or less off the table this year.

“I’d say there’s a growing argument for a Reserve Bank rate rise later in 2018, or maybe even two, but for February, it would be a surprise to see a change. The RBA are likely to stick to their policy of cautious slow movement this year, which means it’s too early for them to make any move at this stage of the game,” said Marshall.

One factor that might still temper the RBA’s desire to start nudging rates up is the high level of household debt Aussies are facing. With close to 30% or more than 921,000 Aussies households under mortgage stress, according to a recent report from Digital Finance Analytics, pushing interest rates higher still is not a move the Reserve Bank will make lightly.

“The banks don’t have to raise home loan rates when the RBA raises the cash rate, but there’s every chance they will. The RBA are aware of this, and will be very careful about adding any more pressure to already struggling households,” Marshall explained.

If your home loan repayments are stretching the family budget thin, you might want to consider refinancing your home loan to find a better deal. To get you started, check out some refinancing loans in the table below.

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Last updated 24 November 2024 Important disclosures and comparison rate warning*

Refinance home loan comparisons on Mozo

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  • Unloan Variable

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    • LVR <80%
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    Initial monthly repayment
    $2,995
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    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Fixed Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <95%
    Interest rate
    5.69 % p.a.
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    Comparison rate
    6.28 % p.a.
    Initial monthly repayment
    $2,899
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    Get the security of a competitive fixed rate home loan for 2 years with IMB. Get up to $4,000 cashback (T&Cs apply). Up to 12 months repayments in advance without penalties. Free Internet and Mobile Banking redraws (T&Cs apply). Up to a 30 year loan term. Split loan available. No offset account.

  • Fixed Rate

    • Owner Occupier
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    • <80% LVR
    Interest rate
    5.74 % p.a.
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    6.81 % p.a.
    Initial monthly repayment
    $2,915

    Enjoy up to $3000 cashback for eligible first home buyers and $2000 cashback for refinancers on eligible home loans with the ANZ Fixed Rate Home Loan. Get the security of repayment certainty with a competitive locked in rate. No ongoing fees to pay. Offset account on 1-year fixed loans ($10/month fee applies). Interest-only payments allowed.

  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
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    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Budget Home Loan

    • LVR <80%
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    Interest rate
    6.04 % p.a.
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    Comparison rate
    6.07 % p.a.
    Initial monthly repayment
    $3,011
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    Enjoy a discounted variable home loan from IMB. Get up to $4,000 cashback (T&Cs apply). Life-of-loan discount off IMB’s standard variable interest rate. Unrestricted additional repayments. Free Internet and Mobile Banking redraws (T&Cs apply). No monthly fees to pay. Up to a 30 year loan term. Split loan available. No offset account.

  • Mortgage Simplifier

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    6.14 % p.a.
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    $3,043

    Get a competitive variable rate with ING’s Mortgage Simplifier. Free extra repayments, no monthly or annual fees. Freedom to make free extra repayments or redraws.

  • Elevate

    • Owner Occupier
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    Interest rate
    6.18 % p.a.
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    Initial monthly repayment
    $3,056

    Get competitive rates on loan terms of 5 to 30 years with the Aussie Elevate Home Loan. Structure your loan with up to five splits. Make additional repayments (T&Cs apply). Offset accounts available. Unlimited redraw using your online banking account. Choose from weekly, fortnightly or monthly payments For loan amounts from $10,000 to $5 million.

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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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