Three in a row? Not today says RBA as rates stay at 1.00% in August
Hold! That was the verdict from the Reserve Bank (RBA) Board which took the decision to maintain the official cash rate at 1.00% at its August meeting in Sydney this afternoon.
The move comes as a respite after two consecutive 0.25% rate cuts at the RBA’s June and July meetings and means that interest rates will remain at record low levels for at least another month.
Despite the hold, speculation remains rife that the RBA will be forced to drop the official cash rate for a third time in 2019 in the coming months.
“Today’s move from the Board was not unexpected, especially given last week’s CPI figure of 1.60% which proved higher than expected. Next month may be a different matter though, as I think there’s a high chance of a cut in either September or October,” said Mozo Banking Expert, Peter Marshall.
“The RBA is treading a fine line between cutting rates to support the economy and cutting rates and panicking people. There are also only a couple of shots left in the rate cut chamber - that’s why they want to be seen as being measured about what they’re doing and not rushing unless there’s a very good reason to rush.”
Cuts trickle down to borrowers as home loan rates dive below 3.00%
Now that we have a chance to breathe following today’s rate hold, what’s actually happened to home loan rates since the RBA made their last cut on July 2?
Perhaps unsurprisingly, fewer home loan lenders passed on the full 0.25% RBA cut this time around. As a result, only eight providers in the Mozo database passed on the full 0.50% cut to their variable rate customers over the two months.
The recent cuts do mean that variable rate borrowers can now take advantage of interest rates as low as 3.00% and below. Here are some of the lowest variable rate offers currently^ in the Mozo database.
Variable rate home loans (owner occupiers making principal and interest repayments)
|Lender||Home Loan||Interest Rate|
|Reduce Home Loans||Low Rider||2.89% (2.91% comparison rate*)|
|Well Home Loans||Well Balanced||2.97% (2.99% comparison rate*)|
|Homestar||Variable Rate Loan||2.99% (3.02% comparison rate*)|
|loans.com.au||Smart Home Loan||3.03% (3.05% comparison rate*)|
|Freedomlend||Variable Home Loan||3.04% (3.04% comparison rate*)|
Some of the major action has come in the fixed rate home loan market though, with 0.50% reductions to the top rates on offer for one and five year terms in the Mozo database proving the highlights among a number of fixed rate changes.
Similarly to variable rates, recent changes mean borrowers can now take advantage of fixed rates offers below 3.00% for a number of terms.
According to Marshall, the recent fixed home loan rate cut action could be a signal of the rate environment we’re entering.
“With rates dropping sharply and flattening out across fixed rate terms for home loans, it shows that lenders don’t think things are going to change anytime soon. Rates could well be depressed for an extended period to come,” he said.
Check out some of the lowest fixed rate offers currently^ in the Mozo database.
Fixed rate home loans (owner occupiers making principal and interest repayments)
|Lender||Term||Home Loan||Interest Rate|
|Greater Bank||1 Year||Great Rate Home Loan||2.79% (3.95% comparison rate*)|
|Mortgage House||2 Year||Advantage Home Loan Special||2.96% (3.33% comparison rate*)|
|Mortgage House||3 Year||Advantage Home Loan Special||2.96% (3.31% comparison rate*)|
|Greater Bank||4 Year||Great Rate Home Loan||3.39% (3.84% comparison rate*)|
|UBank||5 Year||UHomeLoan (Fixed)||3.19% (3.44% comparison rate*)|
^As of 6 August, 2019.
*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 the amount and term you entered.
Read our last month Reserve Bank interest rates update
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