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:
Best variable rate home loan offers
- Reduce Home Loans Rate Buster Variable - 3.35% (comparison rate: 3.42%)
- loans.com.au Essentials Variable - 3.39% (comparison rate: 3.41%)
- Homestar Owner Occupier Loan - 3.44% (comparison rate: 3.49%)
- FreedomLend Variable Home Loan - 3.53% (comparison rate: 3.53%)
- iMortgage Fusion 80 - 3.54% (comparison rate: 3.70%)
Best fixed rate home loan offers
- 1 year - 3.59% - Greater Bank (comparison rate: 4.42%), QT Mutual Bank (comparison rate: 4.38%)
- 2 year - 3.59% - QT Mutual Bank (comparison rate: 4.34%)
- 3 year - 3.49% - My Credit Union (comparison rate: 4.16%)
- 4 year - 3.75% - BCU (comparison rate: 4.24%)
- 5 year - 3.85% - QT Mutual Bank (comparison rate: 4.35%)
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
- RAMS Saver Account - 3.15% (with a minimum deposit of $200 and no withdrawals in the month)
- ME Online Savings Account - 3.05% (when you make a weekly Tap & Go purchase with your ME Everyday Transaction Account Debit MasterCard)
- Australian Unity Active Saver - 3.00% (with a minimum deposit of $250 and no withdrawals in the month)
- Police Bank Bonus Savings Account - 3.00% (with a minimum deposit of $100 and no withdrawals in the month)
- CUA eSaver Reward - 2.90% (when you deposit $1,000 into a CUA transaction account in the month)
See our savings account comparison table to check out the other great offers on the market.
Best term deposits
- 5 months - 2.95% - Goldfields Money
- 1 year - 3.00% - ING Direct
- 2 year - 3.20% - ANZ
- 3 year - 3.20% - St.George, Qudos Bank, People's Choice Credit Union, NAB, Commbank, BankSA, Bank of Melbourne
- 4 year - 3.10% - Arab Bank Australia, G&C Mutual Bank, QT Mutual Bank
- 5 year - 3.30% - RaboDirect
Check out other term deposit options with our term deposit search tool.
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