In what has become the only sure-fire bet on Melbourne Cup Day, the Reserve Bank has moved rates, dropping the official cash rate .25 basis points to 4.50%. This is the 6th consecutive Melbourne Cup day rates move by the RBA and the first rates movement it has made since November last year.

In his statement, Governor Glenn Stevens noted that inflationary pressures had eased from where they were a few months ago, and concerns over Australian growth was less warranted now that the rate is sitting at the mid point of its 2 – 3 per cent target range. Also observed was the news that a workable resolution to the European debt-crisis had been reached, and this combined with local economic factors was the evidence the board needed to cut rates.

What will the banks do?

All eyes now fall squarely on the banks to see what they will do (and how quickly they will do it).

Last week Treasurer Wayne Swan sent a verbal warning to the banks to pay heed to the Reserve Bank lead on interest rates saying there was 'no excuse' for banks to leave rates on hold if the RBA cuts rates. Have they been listening fellow Aussies?

It was a year ago that the Commonwealth Bank decided to lift its variable home loan rate almost double the RBA's increase, and earning itself a time out in the Mozo naughty corner. The Mozo Rate Chasers will be tracking the rates announcements of home loan lenders around the clock and updating our naughty or nice table so be sure to bookmark this page and check back in to find out which lenders make (and don't make) it onto Wayne Swan's Christmas card list.

Fixed or Variable?

In recent months many home loan lenders have cut fixed rates meaning that now is a great time to lock in a low fixed rate loan.

Standard variable rates of the Big 4 banks range from 7.67 to 7.86% p.a. Right now borrowers can lock in a one or three year fixed rate for well under 7%. Even if you take into account a .25% drop many fixed rate loans are still cheaper. One year fixed rates start at 5.89% for the Better Option fixed. Lenders with rates under 7% include Greater Building Society (5.94%), Newcastle Permanent (5.99%) and Resi (5.99%).

Three year rates start at 5.89% for the Better Option fixed rate loan. Lenders with rates 6.3% and under include Newcastle Permanent (5.99%), Citibank (6.25%), ANZ (6.28%), ING Direct (6.29%) and Greater Building Society (6.30%). Search the fixed rate home loans market now.

Watch those savings!

While the champagne corks may be popping for Australian homeowners, the news isn't quite so bubbly for savers as the rates drop means that savings rates are likely to head south as well.

There are a number of term deposits still offering rates of over 6% for savers who want to act fast and lock in a good deal. On a $10,000 deposit over 5 years some top rates include:
- RaboDirect Term Deposit – 6.10%
- St George Long Term Deposit – 6.05%

…or compare all term deposits with our market wide comparison search tool.

And if you're looking for a short-term return on your savings or want more flexibility, both the Rabo Direct High Interest Savings Account is currently paying a bonus rate of 6.51% for 4 months.