RBA announcement: Cash rate dropped to record low 2%

By Mozo ·

It’s good news for homeowners this May with the Reserve Bank of Australia cutting the official cash rate from 2.25% to a record low 2% at today’s board meeting.

In the lead up to the May announcement economists were torn on whether the RBA would drop rates or leave the cash rate steady as several factors needed to be considered, such as rising inflation, the booming property market, strengthening employment and the Australian dollar increase.

Governor Glenn Stevens explained in a statement that in Australia, "the available information suggests improved trends in household demand over the past six months and stronger growth in employment. Looking ahead, the key drag on private demand is likely to be weakness in business capital expenditure in both the mining and non-mining sectors over the coming year."

"Growth in lending to the housing market has been steady over recent months. Dwelling prices continue to rise strongly in Sydney, though trends have been more varied in a number of other cities."

Home loans - to fix or not to fix?

With the cash rate sitting at record lows you may be wondering if now is a good time to lock in a competitive fixed rate. Well, we can report that over recent weeks there has been some great movement in the fixed rate arena.

For instance, HSBC recently slashed its fixed rates, bringing its 1 and 2 year rates down to just 4.29%, its 3 year to 4.39% and reserved its biggest fixed rate drop for its 3 year term that was slashed by 53 basis points to just 3.95% (now the best fixed rate for a 3 year term).

Another lender who has also reduced its fixed rates is CUA, bringing the standard 1 year term rate down to 4.29% and the 2 year fixed rate to a low 4.39%.

Mozo’s database showed the leader in the fixed rate world for a 1 year term was Homestar at 3.85%, Newcastle Permanent at 3.89% for 2 years, HSBC at 3.95% for 3 years (mentioned above), Homestar once again at 4.25% for 4 years and Newcastle Permanent at 4.29% for 5 years.

Homestar also took out the top spot, alongside loans.com.au for the lowest variable rate available, offering an enticing 4.23% (conditions apply) and if you have an LVR of less than 50%, Mortgage House will offer you a market low 4.19%.

Want to discover more great rate mortgage offerings? Head on over to our bustling home loan hub here.

And see if your lender has passed on the full rate cut in the table below:

Savings accounts worthy of your cash stash

As the official cash rate remains at record lows so do savings account rates, making it tough for Aussie savers to reap returns on their coin. We’ve recently seen a number of providers reduce their savings rates, including the big four NAB, Westpac, CommBank and ANZ, as well as the market leading savings account providers RAMS and UBank.

While RAMS dropped the ongoing bonus rate on its Saver account from 3.91% to 3.80%, it is still the best ongoing deal available in the savings account market right now.

ME Bank offers the best intro at 3.85% for the first 4 months when you have a linked ME Bank Everyday Transaction Account but keep in mind after the introductory period it reverts to the much lower 2.50% standard rate. And if you’re a no strings attached kind of saver, check out Rural Bank ONE’s Saver, which is the most competitive at 3.00%.

Looking for a savings account worthy of your cash stash? Start your search in Mozo’s savings account hub here.

Top home loans - last updated January 16, 2021

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