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

Kelly Emmerton

30 Jan 2018

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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.

Competitive loans to refinance your mortgage

Rates updated daily. Advertiser disclosure.

  • loans.com.au

    2.48% p.a.

    2.50% p.a.

    $1234

    Product details Close details
    Smart Home Loan 80

    A low-rate home loan that could save you thousands, with no ongoing fees plus unlimited extra repayments and free redraws. Mozo Experts Choice Low Cost Home Loan 2020.^ You'll need to be borrowing $1 million or less and have at least a 20% deposit required.

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • Optional - with 0.10% additional interest

    • $520

    • 2.48% p.a.

    • 2.50% p.a.

    • $520

    • 80.00%

    • $50,000

    • $1,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Smart Home Loan 80

  • HSBC

    p.a.

    2.95% p.a.

    $1234

    Product details Close details
    Fixed Rate Home Loan

    Have the security of a fixed rate for 2 years with the option to split with one of the HSBC variable Home Loans. No ongoing monthly service fees or annual fees. Mozo Experts Choice Fixed Home Loan 2020^

    • $0.00

    • $300.00

    • yes - free up to $10,000 p.a.

    • no

    • no

    • $0

    • p.a.

    • 2.95% p.a.

    • $0

    • 80.00%

    • $50,000

    • $7,500,000

    • Fixed

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Fixed Rate Home Loan

  • Athena

    2.34% p.a.

    2.34% p.a.

    $1234

    Product details Close details
    Celebrate Variable Home Loan

    Fast online application with no fees. Free extra repayments and redraw facility. Min 40% deposit. Crowned Best New Home Loan for 2020 by the Mozo Experts.^

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • no

    • $0

    • 2.34% p.a.

    • 2.34% p.a.

    • $0

    • 60.00%

    • $100,000

    • $2,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Celebrate Variable Home Loan

  • UBank

    2.49% p.a.

    2.49% p.a.

    $1234

    Product details Close details
    UHomeLoan - Discount Offer

    Enjoy a super low rate, $0 fees and easy application with the Mozo Experts Choice Home Lender Bank of the Year.^ Free redraw with flexible repayments. Min 20% deposit.

    • $0.00

    • $0.00

    • yes - free

    • yes - free

    • no

    • $0

    • 2.49% p.a.

    • 2.49% p.a.

    • $0

    • 80.00%

    • $100,000

    • -

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the UHomeLoan - Discount Offer

  • Suncorp

    p.a.

    3.28% p.a.

    $1234

    Product details Close details
    Fixed Home Loan Special Offer Home Package Plus

    No monthly account keeping fees & No loan establishment fee. Get a $2,000 cash bonus when you refinance with an eligible Suncorp Bank Home Loan of $250k+. T&Cs & eligibility criteria apply.

    • $375.00 yearly

    • $350.00

    • yes - free up to $500 per month

    • no

    • no

    • $0

    • p.a.

    • 3.28% p.a.

    • $0

    • 90.00%

    • $150,000

    • -

    • Fixed

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Fixed Home Loan Special Offer

^See information about the Mozo Experts Choice Home loans Awards