RBA holds in May 2024, what this means for your home loan

Today, the Reserve Bank of Australia (RBA) announced it will hold the cash rate in May 2024 at 4.35%. 

This is now the fifth consecutive Monetary Policy Decision without change, meeting expert predictions. 

The RBA says inflation is declining slower than it expected, leading to economic uncertainty. 

"The economic outlook remains uncertain and recent data have demonstrated that the process of returning inflation to target is unlikely to be smooth."

For the average borrower, not much is likely to change in the short term. 

Once the RBA is satisfied that inflation is squarely within its target band of 2 to 3%, that’s when they might start cutting the cash rate. 

Economists at the Big Four banks predict the first cash rate cut to happen in November 2024 after CommBank and Westpac revised their previous September forecast. 

However, a cash rate cut might not mean immediate savings for home loan borrowers, according to Mozo finance expert, Peter Marshall. 

“When the RBA makes a rate cut call, then the banks will consider what they're going to do,” he said. 

“If they decide that they're going to pass on some or all of that rate cut, it is usually announced that it will happen in a few weeks’ time.

“So you're already looking at four or five weeks after the RBA announcement before the rate cut gets implemented.” 

Even then, he says, it could take your bank an additional four weeks or so to adjust your rate and repayments, extending the timeline to a couple of months. 

Compare and refinance your home loan instead of waiting for rate cuts

While the average owner-occupier, variable home loan rate in Mozo’s database (currently 6.80% p.a. ) dropped 3 basis points since 1 April 2024, the average monthly repayment is still quite high, at $4,164. 

It might be time to compare home loans if you’re paying an above-average interest rate. 

As at 3 May 2024, there were 194 owner-occupier, variable rate home loans in the Mozo database with an interest rate lower than 6.80% p.a.

G&C Mutual Bank’s Essential Worker Home Loan even has an interest rate a whole percent lower than the average variable rate, at 5.80% p.a. (5.83% p.a. comparison rate*). 

IMB Bank, at 6.14% p.a. (6.17% p.a. comparison rate*), also revised its cashback offer on the Budget Home Loan, offering up to $4,000 cashback when you refinance your home loan (T&Cs apply). 

The Unloan Variable, at 5.99% p.a. (5.90% p.a. comparison rate*), is another option for those intrigued by the idea of a recurring annual discount on their interest rate. 

But these are just a few of the home loans we track that beat the average interest rate – there are about 191 more in our database! 

While that seems like a lot to comb through, you can start your search for a better rate by checking out the best home loans in 2024, or having a browse through the featured products below.