RBA freezes interest rates at 1.75% as winter hits

After last month’s shock interest rate cut to 1.75%, things are calming down again for the Aussie economy, as the Reserve Bank announced rates will remain on hold throughout June.

After the minutes from May’s RBA meeting revealed some concerning the last cut, it was no surprise to most experts that this month brought no change. An unexpectedly strong March quarter for GDP numbers, which soothed fears about low inflation, as well as a renewed surge in housing prices spurred on by last month’s rate cut likely contributed to the decision to keep interest rates on hold.

In a statement, RBA Governor Glenn Stevens said "In financial markets, conditions have generally been calmer for the past several months following the period of volatility early in the year."

"Taking account of the available information, and having eased monetary policy at its May meeting, the Board judged that holding the stance of policy unchanged at this meeting would be consistent with sustainable growth in the economy and inflation returning to target over time," he added.

Whilst this was the expected outcome of the RBA’s announcement for most experts, many are predicting that 2016 hasn’t seen its last interest rate cut just yet. Many economists are forecasting another cut - down to a landmark 1.5% - later this year, with August, September or November as popular bets so far.

Home loans are heating up

Last month’s RBA rate cut saw borrowers come out on top, as 41 lenders followed suit and passed on the full 0.25% reduction to rates. However, borrowers can’t afford to be negligent of their home loans, as many other lenders gave the rate cut the cold shoulder, and passed on only partial cuts.

It’s also worth noting, said Mozo Data Manager Peter Marshall, that even lenders who passed on the full rate cut didn’t necessarily do so on all their home loan products. “Investors in particular may have missed out, and it’s worthwhile for Aussie borrowers to review their mortgage rates, to ensure they’re still getting the best deal on the market.”

Best variable rate home loan offers

ProductVariable rate
FreedomLend Variable Home Loan3.73%
UBank UHomeLoan - Value Offer3.74%
Newcastle Permanent Discounted Variable Home Loan Premium Plus Package3.74%

*All home loans rates based on owner occupiers with an LVR of 80%

Best fixed rate home loan offers

  • 1 year fixed rate: 3.50% (Comparison rate 4.13%) - Illawarra Credit Union
  • 2 year fixed rate: 3.64% (Comparison rate 4.82%) - Newcastle Permanent
  • 3 year fixed rate: 3.69% (Comparison rate 4.00%) - UBank
  • 4 year fixed rate: 3.99% - Greater Bank (Comparison rate 4.49%), Teachers Mutual Bank (Comparison rate 4.85%), UniBank (Comparison rate 4.85%)
  • 5 year fixed rate: 3.99% - Greater Bank (Comparison rate 4.48%), Teachers Mutual Bank (Comparison rate 4.77%), UniBank (Comparison rate 4.77%)

You can find all the other great home loan offers available in our home loan comparison table.

Savings kept on ice for now

The past month has seen interest rates on savings take a major nosedive, and as the Reserve Bank opts to keep the official cash rate at a record low, savers will need to be on the lookout for great deals if they want to maximise the potential of their rainy day fund.

Lenders took on average around 16 days to pass on last month’s rate cut to home loan borrowers - and just 11 to pass it on to those building up their saving account balance. So while continuing low interest rates won’t be news to savvy savers, luckily, there are still some great savings account deals to be found.

Best savings accounts

ProductInterest rateSpecial conditions
Citibank Online Saver3.40%Introductory rate for the first 4 months
ME Online Savings Account3.35%Ongoing bonus rate if you make a weekly Tap & Go purchase with the debit card attached to your ME Everyday Transaction Account
Bankwest TeleNet Saver3.25%Introductory rate for the first 4 months
RaboDirect High Interest Savings Account3.25%Introductory rate for the first 4 months
P&N Bank Hi Saver3.20%Introductory rate for the first 4 months

To find more great places to park your stash, check out our saving accounts comparison table, and to keep up to date with the world of finance, don’t forget to subscribe to our monthly newsletter, the Mozo Banking Roundup.

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.
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    Variable Home Loan

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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, 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.

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