After a record cut, RBA keeps cash rate steady at 2% in June

After slashing the official cash rate to a record low 2% last month, the Reserve Bank of Australia left the cash rate on hold at today’s board meeting.

Economists had almost unanimously predicted that the RBA would leave the cash rate unchanged to take time to analyse the consequences of the previous two rate cuts in February and May. As for the remainder of the year, experts remain divided on whether there would be another cash cut in 2015.

Governor Glenn Stevens noted in a statement that, “Low interest rates are acting to support borrowing and spending. Credit is recording moderate growth overall, with stronger lending to businesses and growth in lending to the housing market broadly steady over recent months. Dwelling prices continue to rise strongly in Sydney, though trends have been more varied in a number of other cities. The Bank is working with other regulators to assess and contain risks that may arise from the housing market. In other asset markets, prices for equities and commercial property have been supported by lower long-term interest rates.”

He further added that the Australian dollar has declined noticeably against a rising US dollar over the past year, though less so against a basket of currencies. Further depreciation seems both likely and necessary, particularly given the significant declines in key commodity prices.

Home loans: The mortgage ups and downs

The cash rate may be steady this month but the last cut created quite a stir in the home loan market with the demand for fixed rate home loans going up. The movement on fixed rates was mixed with some lenders making cuts while others made increases. According to Mozo’s database, the best fixed rate for one year is 3.49% from Greater Building Society, for two years is 3.89% from Newcastle Permanent and the best three year fixed rate is 3.95% from HSBC. The top four and five year fixed rate is 4.29% from Newcastle Permanent.

As for variable rates, unlike the February rate cut when most lenders passed on the full cut, last month many institutions only passed on a portion of the cut. Of the Big 4, ANZ was the only one to pass on the full 0.25% cut. Westpac passed on 0.22%, while CommBank and NAB passed on. 0.20%.

The lowest variable rate available at the moment is 3.98%, from both Homestar and loans.com.au (conditions apply). But for those with an LVR of less than 50%, Mortgage House is offering an even lower rate of 3.94%.

If you’re looking for mortgage options, head over to Mozo’s home loan database to compare the best offerings or if you’d like to speak with one of our home loan experts about your home loan send us an enquiry.

Savings accounts: Where to stash your cash

Even though many of the banks failed to pass on the full cut to home loans, most didn’t shy away from dropping savings account base rates. 44 different institutions cut base savings rates by 25 basis points according to our database. In fact, the only two rate increases in the month were from major banks increasing one headline rate while reducing another.

ANZ increased the introductory rate on its Online Savings Account to 3.10%, and reduced the account’s ongoing base rate to 2.60%. While Commonwealth took a slightly different approach by increasing the ongoing bonus rate on its GoalSaver account to 3.05%, and slashing both the introductory as well as base rates on its NetBank Saver to 2.75% and 2.00% respectively.

RAMS’ Saver continues to offer the best ongoing bonus rate at 3.60%, followed by 3.50% for ING Direct’s Savings Maximiser. The best intro rate is offered by Citibank’s Online Saver at 3.40% for the first four months.

If you’re not looking for bonus savers, the best ongoing rate is offered by Newcastle Permanent Building Society’s Online Savings Account at 2.85% (but you must have an everyday account or home loan to qualify). The best rates without any strings attached are Rural Bank’s 2.75% for over $5,000 and AMP’s 2.60%.

For a complete picture on the most competitive interest rates, check out Mozo’s savings accounts hub and compare the best deals for savings account today.

Read last month's Reserve Bank interest rates update.

Top home loans - rates updated daily

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure.
  • placeholder
    Mozo Experts Choice 2021
    Smart Booster Home Loan

    2 Year Discounted Variable Rate, Owner Occupier, Principal & Interest, <80% LVR

    interest rate
    comparison rate
    Initial monthly repayment
    1.85% p.a.variable for 24 months and then 2.25% p.a. variable
    2.21% p.a.

    New super low introductory rate home loan for two years. Min 20% deposit. No monthly or ongoing fees. Fast settlement times. Mozo award-winning online lender. Friendly, local Australian based team.

    Go to site
    Details
  • placeholder
    Mozo Experts Choice 2021
    UHomeLoan

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.85% p.a.
    fixed 3 years
    2.24% p.a.

    $0 fees and easy application. Choose between weekly, fortnightly or monthly repayments. 3 year fixed rates are for new Owner Occupier Principal & Interest loans.

    Go to site
    Details
  • Hot DealFor a chance to win $100K towards your home loan, apply with Athena before Oct 31 & approved by Dec 15 (Please read the full T&C's)
    placeholder
    Mozo Experts Choice 2021
    Celebrate Variable Home Loan

    <60% LVR, Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.99% p.a. variable
    1.99% p.a.

    Fast and efficient online application. Automatic discounts as loan is paid down. Free extra repayments and redraw facility. Zero fees. Min 40% deposit required. Winner of three Mozo Expert's Choice Awards for 2021.

    Go to site
    Details
  • placeholder
    Variable Home Loan

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.99% p.a. variable
    1.99% p.a.

    Refinance only. Super-fast digital application process. Zero upfront fees. No on-going service fees. Free 100% offset sub account. Apply Online & Refinance before 29 October 2021 for the chance to WIN your home loan interest free - Save up to $1.1 million. T&Cs apply.

    Go to site
    Details
  • placeholder
    Basic Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR<70%

    interest rate
    comparison rate
    Initial monthly repayment
    2.09% p.a.
    fixed 3 years
    2.32% p.a.

    No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.

    Go to site
    Details

* 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, loan amount and term entered. 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.

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

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.