RBA leaves interest rates on hold at 1.50% for Christmas season

The Reserve Bank board has opted to keep interest rates on hold at 1.50% for the festive season in its last meeting of 2016.

The official cash rate has stood at this record low since August, and experts had overwhelmingly predicted the result of today’s announcement, with only a 2% market expectation for a rate cut.

In his statement, Reserve Bank Governor Philip Lowe said, “Low interest rates have been supporting domestic demand and the lower exchange rate since 2013 has been helping the traded sector. Financial institutions are in a position to lend for worthwhile purposes. These factors are assisting the economy to make the necessary adjustments, though an appreciating exchange rate could complicate this."

He added that, "Inflation remains below most central banks’ targets, although headline inflation rates have increased recently. Globally, the outlook for inflation is more balanced than it has been for some time."

Although inflation and wage growth are both low, the RBA seems to be holding out until next year to make any changes. Analysts have been predicting that the cash rate would reach 1% in 2017, however, many are now forecasting rate hikes by the end of next year, primarily in order to ease rising house prices.

Ba humbug! Banks play Scrooge with home loans

Despite the RBA’s decision to keep interest rates steady at the current low rate, out of cycle rate hikes by certain banks may put them on borrowers’ naughty lists. According to Mozo’s Banking Roundup, 19 lenders have increased rates in the last few weeks, including big banks Westpac and CBA.

But it’s not all bad news for borrowers - there are plenty of good deals to be found for those willing to look. To help you out, here are some of the best home loans at the moment:

The Grinch that stole savings

Savers haven’t seen much relief lately, with a number of banks cutting interest rates on savings accounts and short term deposits. As a minor consolation for long term savers though, there wasn’t much change either way on term deposits of a year or longer.

Notably, ANZ was the only bank to raise rates on a savings account, boosting the introductory offer on its Online Saver Account, from 2.75% for 3 months to 2.85% for 6 months.

But as with home loans, there are still some good deals to be snapped up by savvy savers. Here are some of the best places for your rainy day fund:

Best savings accounts

See our savings account comparison table to check out the other great offers on the market.

Best term deposits

Check out other term deposit options with our term deposit search tool.

Read last month's Reserve Bank interest rates update.

Top home loans - last updated 1 March 2024

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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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