RBA holds rates at 1.50% in March, but is a cut looming on the horizon?
![](http://cdn.mozo.com.au/redactor/pictures/8091/rba-rate-hike-on-the-horizon_original.jpg)
The official cash rate has once again remained fixed at a record low 1.50% following the latest Reserve Bank Board meeting this afternoon in Sydney.
Despite a growing chorus of pundits and experts suggesting that the RBA will be required to cut interest rates in the near future, the board resisted temptation for at least another month with RBA Governor, Philip Lowe, stating that rate stability was currently necessary to maintain economic growth.
"The low level of interest rates is continuing to support the Australian economy. Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual," he said.
"Taking account of the available information, the [RBA] Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time."
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The latest decision means rates have been on hold for 28 consecutive meetings, but Mozo Product Data Manager, Peter Marshall, believes that a mounting combination of factors could force the RBA to cut rates not once, but twice, before the year is out.
“For the last couple of months I’ve been talking more definitively about the next rate change being a cut, and I think the case for that is strengthening,” he said.
“I still don’t think the RBA’s going to rush into anything though - it’s not their style. They don’t have many cuts left in the bank, so they’ll want to apply what they do have left quite judiciously, so I expect that they’ll wait until May or June before making a move.”
What are the factors putting pressure on the RBA?
For a considerable time the RBA had indicated that a future cash rate change, when it does come, was expected to be a rate rise.
But during a speech in early February, RBA Governor, Philip Lowe, altered that sentiment by suggesting that the probabilities of a hike or a cut were now more evenly balanced.
“The RBA would much rather be pushing rates up in order to give us some scope to cut rates in the case of a future shock, so I really don’t think they’ll be happy about cutting rates if they do decide to do it this year,” said Marshall.
“But there are just so many different things going on at the moment that even without a particularly massive one off external shock the economy is under even more pressure than what it was a few months ago.”
![](http://cdn.mozo.com.au/redactor/pictures/8092/rba-sydney-australia_original.jpg)
So with the RBA having altered its tune, and many commentators believing that a drop in the official cash rate is well and truly on the cards, just what are some of the factors driving a potential cut in the near future?
Peter Marshall shared his take on the state of some of the key economic indicators.
1. Employment
“Employment figures are very good at the moment - in fact, unemployment in New South Wales now sits at just 3.9%. But there are big signs that that’s not going to last. There are a few different parts of the economy which are really starting to struggle and that will likely flow through to the unemployment figures in the coming months.”
2. GDP
“The fourth quarter GDP figure, which will be released tomorrow, is expected to be extremely weak. There are a lot of forecasts that the growth figure will be around 0.4% or 0.5%, so at an annual rate that would take us to less than 2%. That’s well below the 3% figure the RBA consistently cites.”
3. Housing
“The sliding housing market, which has been particularly evident in Sydney in Melbourne so far, is still on the downslope, which is starting to have an effect on the jobs market with a lot of developers and construction companies getting into a bit of strife.”
“It’s also worth noting that mortgage arrears are starting to go up, which will also be of concern.”
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Interest rates on your mind? The official cash rate may be beyond your control, but that doesn’t mean you can’t influence the rates you’re getting on your everyday banking products.
Start today by comparing home loan, savings account and even term deposit rates with Mozo’s handy comparison tables.
Read last month's Reserve Bank interest rates update.
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6.34
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$0
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$300
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5.99
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6.34
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$2,995
Competitive Fixed rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.
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5.99
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6.34
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$250
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$250.00 yearly
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$300.00
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yes - free
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yes - free
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yes
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6.01
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6.14
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p.a.
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$3,001
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6.01
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6.14
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$134
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$10.00 monthly
- Discharge fee
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$350.00
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-
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-
yes
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- 90.00%
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- $5,000
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- $3,000,000
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- Interest rate
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6.09
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- Comparison rate
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6.11
%
p.a.
- Initial monthly repayment
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$3,027
Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.
- Interest rate
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6.09
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6.11
%
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$250
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$0.00
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$300.00
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no
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- Interest rate
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6.09
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- Comparison rate
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6.13
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- Initial monthly repayment
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$3,027
Refinancers or first home buyers pay no monthly or annual fees. Up to $3,000 cashback when you complete your home loan application online. $2,000 cashback on loans ≥$250K; or $3,000 cashback on loans ≥$500K. LVR ≤80%. T&Cs and credit criteria apply.
- Interest rate
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6.09
%
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- Comparison rate
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6.13
%
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- Upfront fees
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$595
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$0.00
- Discharge fee
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$250.00
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yes - free
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yes - fees apply
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no
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Basic Home Loan
- Owner Occupier
- LVR<60%
- Principal & Interest
- Interest rate
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6.14
%
p.a.
Variable
- Comparison rate
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6.16
%
p.a.
- Initial monthly repayment
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$3,043
Enjoy a low rate home loan with $0 application fee and $0 ongoing fees. Flexibility to split your loan and set different repayment types. Fee free redraw from your loan using online banking. Flexible ways to repay. 40% Deposit required.
- Interest rate
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6.14
%
p.a.
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6.16
%
p.a.
- Upfront fees
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$350
- Ongoing fees
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$0.00
- Discharge fee
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$400.00
- Extra repayments
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yes - free
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yes - free
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no
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Flex Home Loan
- Owner Occupier
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- Interest rate
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6.14
%
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- Comparison rate
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6.38
%
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- Initial monthly repayment
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$3,043
Competitive variable rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.
- Interest rate
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6.14
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Variable
- Comparison rate
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6.38
%
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- Upfront fees
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$250
- Ongoing fees
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$250.00 yearly
- Discharge fee
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$300.00
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yes - free
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yes - free
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yes
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Offset Home Loan
- Owner Occupier
- LVR<60%
- Principal & Interest
- Interest rate
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6.14
%
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Variable
- Comparison rate
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6.39
%
p.a.
- Initial monthly repayment
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$3,043
Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.
- Interest rate
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6.14
%
p.a.
Variable
- Comparison rate
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6.39
%
p.a.
- Upfront fees
-
$350
- Ongoing fees
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$248.00 yearly
- Discharge fee
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$400.00
- Extra repayments
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yes - free
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yes - free
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yes
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- $150,000
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Basic Home Loan
- Fixed
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- Principal & Interest
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- Interest rate
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6.25
%
p.a.
Fixed 3 years
- Comparison rate
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6.20
%
p.a.
- Initial monthly repayment
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$3,079
No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $10,000,000.
- Interest rate
-
6.25
%
p.a.
Fixed 3 years
- Comparison rate
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6.20
%
p.a.
- Upfront fees
-
$350
- Ongoing fees
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$0.00
- Discharge fee
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$400.00
- Extra repayments
-
yes - up to $10,000 p.a.
- Redraw facility
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yes - free
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no
- Maximum loan to value ratio
- 70.00%
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- Maximum borrowing amount
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Offset Home Loan
- Fixed
- Owner Occupier
- Principal & Interest
- LVR <70%
- Interest rate
-
6.25
%
p.a.
Fixed 3 years
- Comparison rate
-
6.42
%
p.a.
- Initial monthly repayment
-
$3,079
- Interest rate
-
6.25
%
p.a.
Fixed 3 years
- Comparison rate
-
6.42
%
p.a.
- Upfront fees
-
$350
- Ongoing fees
-
$248.00 yearly
- Discharge fee
-
$400.00
- Extra repayments
-
yes - up to $10,000 p.a.
- Redraw facility
-
yes - free
- Offset account
-
yes
- Maximum loan to value ratio
- 70.00%
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- $150,000
- Maximum borrowing amount
- $10,000,000
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- Fixed
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- Principal & Interest
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- Monthly
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Fixed Rate
- Owner Occupier
- Principal & Interest
- <80% LVR
- Interest rate
-
6.54
%
p.a.
Fixed 2 years
- Comparison rate
-
7.10
%
p.a.
- Initial monthly repayment
-
$3,174
Enjoy up to $3000 cashback for eligible first home buyers and $2000 cashback for refinancers on eligible home loans with the ANZ Fixed Rate Home Loan. Get the security of repayment certainty with a competitive locked in rate. No ongoing fees to pay. Offset account on 1-year fixed loans ($10/month fee applies). Interest-only payments allowed.
- Interest rate
-
6.54
%
p.a.
Fixed 2 years
- Comparison rate
-
7.10
%
p.a.
- Upfront fees
-
$160
- Ongoing fees
-
$0.00
- Discharge fee
-
$160.00
- Extra repayments
-
yes - free up to to lesser of 5% of original fixed loan amount, or $5,000 each year
- Redraw facility
-
no
- Offset account
-
Optional - $10 per month - 1 year fixed term only
- Maximum loan to value ratio
- 80.00%
- Minimum borrowing amount
- $20,000
- Maximum borrowing amount
- -
- Type of mortgage
- Fixed
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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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While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.