Interest rates remain frozen at 1.50% following June RBA meeting

The weather may have well and truly started to turn with the onset of winter, but unlike the changing seasons, the RBA board has remained consistent as ever when it comes to the official cash rate following today’s meeting in Sydney.

Deciding to keep interest rates at an historic low of 1.50%, today’s decision from the RBA marked a 20th consecutive meeting without change, with RBA Governor Philip Lowe highlighting continued high levels of household debt and low inflation in his statement.   

"APRA's supervisory measures and tighter credit standards have been helpful in containing the build-up of risk in household balance sheets, although the level of household debt remains high," he said. 

"While there may be some further tightening of lending standards, the average mortgage interest rate on outstanding loans is continuing to decline."

RELATED: Rate hike shock hits 1 in 2 borrowers

Today’s decision comes in the wake of a number of experts walking back predictions of a 2018 rate change in the last month, with NAB’s Group Chief Economist, Alan Oster, the most prominent among them. Oster confirmed that the bank wasn’t predicting a rate hike until at least mid-2019, which puts it more in line with the consensus from Australia’s other big four banks.

This sentiment is shared by Mozo Product Data Manager, Peter Marshall, who maintained that the RBA is still lacking the scope to change the official cash rate any time in the near future.

“The RBA board is going to keep sitting on their hands for a while yet and I don’t think the cash rate will go back up to 3.00% any time soon - it’s many years away,” he said. 

Variable home loan rates trending higher

While the official cash rate may be charting a steady course, the same can’t be said for variable home loan rates. According to figures from the Mozo database, variable home loan rate increases actually outweighed decreases in the month of May - the first time since July 2017.

In fact, Citibank today announced that it will be increasing interest rates on its suite of variable rate home loan offers by 0.10%, effective as of Friday.

“We’ve seen a lot of evidence of variable rates increasing and analysts are saying that there will be a lot more of them to come as banks seek to claw back increased funding costs, so people should be aware of that and consider their options when looking at fixed versus variable home loan offers,” said Marshall.

Speaking of which, here are some of the best home loans offers currently* in the Mozo database:

Best variable rate home loan offers

  • Reduce Home Loans Rate Lovers Variable Home Loan - 3.39% (comparison rate: 3.46%)
  • BIDeloan SMARTeloan - 3.39% (comparison rate: 3.84%)
  • Easy Street Standard Variable - 3.49% (comparison rate: 3.52%)
  • Freedomlend Variable Home Loan - 3.49% (comparison rate: 3.55%)
  • Tic:Toc Variable Home Loan - 3.52% (comparison rate: 3.53%)
  • iMortgage Fusion 80 - 3.52% (comparison rate: 3.67%)

Best fixed rate home loan offers (3 year term)

Deposit account divergence

Though rising variable home loan rates won’t be a welcome sight for home owners, the continuing upward trend among term deposits may be cause for celebration among Aussie savers.

An analysis by Mozo of term deposit rates over the month of May revealed that increases once again exceeded decreases. This is the third straight month in which they’ve done so, though the leading rates in the Mozo database remain unchanged.  

Marshall explained that the upward rate trajectory among term deposits was in response to the continued overseas funding squeeze being felt by Australian lenders, with banks and other institutions forced to look closer to home in order to secure funding.

“Banks are trying to stimulate demand and stimulate deposit growth so that they’ve got money to lend out to mortgages,” he said.

“We’re particularly seeing a lot of these second tier and regional banks lifting deposit rates because they have less leverage in getting funds from overseas, or from local banks under wholesale arrangements.”

Unfortunately for savers looking for a more flexible home for their savings stash, the same trend isn’t being observed for savings accounts, with little movement among saving account rates over the past month.

Check out some of the best offers for term deposits and savings accounts currently* in the Mozo database:

Best term deposit offers (based on a balance of $25,000)

Best ongoing savings account offers

  • RAMS Saver Account - 3.00% (when you deposit a minimum of $200 and make no withdrawals every month)UBank USaver with Ultra Transaction Account - 2.87% (when you deposit at least $200 into the account or a linked Ultra Transaction Account every month)
  • ME Online Savings Account - 2.85% (when you make a weekly tap and go purchase with a ME Everyday Transaction Account Debit MasterCard)
  • Australian Unity Active Saver - 2.80% (when you make a minimum deposit of at least $250 and no withdrawals each month)
  • Coastline Credit Union Bonus Reward Saver - 2.80% (when you make a minimum deposit of $20 and make no withdrawals within the month)
  • ING Savings Maximiser - 2.80% (when you deposit $1,000 or more each month from a linked Orange Everyday account as well as make at least five purchases on your credit or debit card)

RELATED: 5 killer EOFY home loan deals

Fancy comparing home loans, term deposits or savings accounts for yourself? Mozo’s handy comparison tables make finding a better deal on a range of banking and insurance products easy.

*Rates accurate as of June 5, 2018.

Read last month's Reserve Bank interest rates update.

Home loan comparisons on Mozo

Mozo may receive payment if you click the products below. We don’t compare the entire market, but you can search our database of 472 home loans.
Last updated 14 June 2024 Important disclosures and comparison rate warning*
  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Basic Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    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.

  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Discount Variable Home Loan

    • Owner Occupier
    • LVR<70%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    6.01 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    A low rate home loan for owner-occupiers packed with great features including unlimited extra repayments, free online redraw, no application or monthly admin fees. Rate will vary depending on LVR. Winner of a Mozo Experts Choice 2024 Low Cost Home Loan Award^

  • Variable Home Loan 90

    • Principal and Interest
    • LVR <90%
    Interest rate
    6.04 % p.a.
    Variable
    Comparison rate
    6.06 % p.a.
    Initial monthly repayment
    $3,011
    Go to site

    Affordable home loan rate for buyers or refinancers. No monthly or ongoing fees. Option to add an offset for 0.10%. Access to savings with unlimited redraws available. Minimum 10% deposit required.

  • Fixed Rate Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <80%
    Interest rate
    6.09 % p.a.
    Fixed 3 years
    Comparison rate
    6.15 % p.a.
    Initial monthly repayment
    $3,027

    Additional repayments of up to $10K per fixed year. Interest rate discounts available. Waiver of $499 application fee when combined with an Orange Advantage Home Loan.

  • The Better Home Loan Special Offer

    • Owner Occupier
    • Principal & Interest
    • LVR<80%
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.14 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Enjoy a variable rate home loan with a bunch of features from Police Credit Union. Make extra repayments at any time without penalty. No monthly, annual or upfront fees. Free online redraw. Minimum 20% deposit. Qualifying criteria applies. Minimum loan amount is 200K. For new customers only. Mozo Experts Choice Home Lender Credit Union of the Year 2023.

  • Basic Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    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.

  • Mortgage Simplifier

    • LVR<80%
    • Owner Occupier
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.17 % p.a.
    Initial monthly repayment
    $3,043

    Get a competitive variable rate with ING’s Mortgage Simplifier. Free extra repayments, no monthly or annual fees. Freedom to make free extra repayments or redraws.

  • Offset Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.39 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    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.

  • Basic Home Loan

    • Fixed
    • Owner Occupier
    • Principal & Interest
    • LVR<70%
    Interest rate
    6.25 % p.a.
    Fixed 3 years
    Comparison rate
    6.20 % p.a.
    Initial monthly repayment
    $3,079
    Go to site

    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.

  • Fixed Rate

    • Owner Occupier
    • Principal & Interest
    • <80% LVR
    Interest rate
    6.59 % p.a.
    Fixed 3 years
    Comparison rate
    7.06 % p.a.
    Initial monthly repayment
    $3,190

    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.

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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.

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.