Interest rates to stay at 1.50% into 2019 following December RBA meeting
Article by Tom Watson
Summer may be officially here and temperatures hotting up, but the official cash rate remains well and truly frozen following another rate hold by the Reserve Bank Board at the December meeting in Sydney this afternoon.
The latest decision marks a 26th straight meeting at which the RBA has kept rates steady at 1.50%, ensuring that they will now remain at record low levels until February 2019 at the earliest.
In his post-meeting statement, RBA Governor Philip Lowe commented on the positive performance of the Australian economy and encouraging unemployment figures which have hit a six year low, though he also highlighted some of the continuing pressures.
"One continuing source of uncertainty is the outlook for household consumption. Growth in household income remains low, debt levels are high and some asset prices have declined. The drought has led to difficult conditions in parts of the farm sector," he said.
RELATED: Meet the lenders the big banks hate
According to Mozo Product Data Manager, Peter Marshall, the RBA may be encouraged by recent signalling from the U.S Federal Reserve.
“The Federal Reserve recently indicated that it was going to ease off on the rate hikes for the time being in order to see how the raises they’ve implemented so far impact the economy,” said Marshall.
“What that does is take some of the pressure off the RBA. The gap between American and Australian rates are not going to keep growing so money’s not going to be flooding out of the country any more than it has already.”
November Rate Wrap
Another month, another rate hold. But while the official cash rate may be steady as a rock, home loan rates have continued to move around as usual.
According to the Mozo database, while November was a relatively quiet month, variable home loan rates hikes continued to outweigh cuts - especially for owner occupiers. Among the more significant changes, NAB increased its Base Variable Rate Home Loan while online retailer Kogan entered the market with a suite of low rate offers.
Here are some of the lowest variable home loan rates currently* in the Mozo database:
Low variable rate home loan offers*
- Reduce Home Loans Rate Lovers Variable Home Loan - 3.44% (comparison rate: 3.51%**)
- Easy Street Standard Variable - 3.49% (comparison rate: 3.53%**)
- Well Home Loans Well Balanced 3.49% (comparison rate: 3.54%**)
- Freedomlend Variable Home Loan - 3.54% (comparison rate: 3.55%**)
- Homestar Variable Rate Loan - 3.54% (comparison rate: 3.59%**)
AMP made a 58 basis point cut to its 2 year 3.75% Fixed Rate Loan (Professional Package) for owner occupiers, while Bank First made cuts to both its 2 and 3 year fixed rate deals for owner occupiers and investors.
Check out some of the lowest fixed home loan rates for different terms currently* in the Mozo database:
Low fixed rate home loan offers*
- 1 Year: Greater Bank Ultimate Home Loan (Fixed, Package) - 3.49% (comparison rate: 4.57%**)
- 2 Year: Tic:Toc Fixed Home Loan - 3.64% (comparison rate: 3.59%**)
- 3 Year: Easy Street Fixed Home Loan - 3.69% (comparison rate: 4.11%**) and Community First Credit Union Fixed Rate Home Loan - 3.69 (comparison rate: 4.93%**)
- 4 Year: Greater Bank Ultimate Home Loan (Fixed, Package) 3.99% (comparison rate: 4.56%**)
- 5 Year: Greater Bank Ultimate Home Loan (Fixed, Package) 3.99% (comparison rate: 4.54%**)
Savings Accounts and Term Deposits
November proved to be just as quiet when it came to savings accounts and term deposits, though prospective savers might take heart from a number of positive changes.
Chief among these was the introduction of the MOVE Bonus Saver account which offers an ongoing bonus rate of 2.90% for savers who are able to deposit at least $200 into the account each month without making any withdrawals. The account is currently the highest ongoing bonus savings rate in the Mozo database.
Bank First also got amongst the action - hiking it’s Bonus Saver rate from 2.30% to 2.80% which now makes it the equal third highest ongoing bonus savings rate in the Mozo database.
High ongoing savings account bonus offers*
- 2.90% - MOVE Bank Bonus Saver (if you deposit at least $200 into the account and make no withdrawals during the month)
- 2.87% - UBank USaver with Ultra Transaction Account (if you deposit at least $200 into the account or a linked Ultra Transaction Account each month)
- 2.85% - ME Online Savings Account (if you make a weekly Tap & Go purchase using a linked ME Everyday Transaction Account buck Debit MasterCard)
- 2.85% - Bank First Bonus Saver (if you deposit at least $1 into the account and make no withdrawls each month)
- 2.80% - Australian Unity Active Saver (if you make a minimum deposit of $250 and no withdrawals each month)
When it came to term deposits, the main change throughout the month of December came in the form of a 35 basis point bump from Arab Bank Australia to its 12 month offer. The new rate of 3.00% now sits alone at the top of the Mozo database for that term.
Unfortunately for savers in general though, Marshall doesn’t believe that the changes are the start of a rate rise resurgence.
“These increases don’t really say anything about any ongoing trends as they’re more likely to be strategic moves by individual providers trying to grab a bit more of the market,” he said.
High term deposit offers (based on a balance of $25,000)*
- 1 Year: 3.00% - Arab Bank Australia
- 2 Year: 2.95% - Bank Australia
- 3 Year: 3.00% - Australian Unity, Bank Australia, Greater Bank, Heritage Bank, ME, Maitland Mutual, Qudos Bank, Teachers Mutual Bank, UniBank
- 4 Year: 3.20% - RaboDirect
- 5 Year: 3.40% - RaboDirect
Wants to compare even more great home loan, savings accounts and term deposit offers? It’s easy. Head over to Mozo’s banking hub and use our handy comparison tables to compare products from a range of different Australian banks and providers.
*Rates accurate as of December 4, 2018.
**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.
Read our last month Reserve Bank interest rates update
Switch & Save Calculator
Compare savings from over 100 credit cards.
How much could you save by switching your credit card?
Find out in a few clicks.