RBA keeps cash rate on hold at 2% in July
Article by Mozo
The experts were right, as the Reserve Bank of Australia has left the official cash rate at a steady 2% after today’s July board meeting. Some of the reasons for the RBA leaving the cash rate unchanged were high property prices and increasing household debt.
Financial analysts have also suggested that while the cash rate is likely to remain flat for a few months, there could be a further cut before the end of the year.
Governor Glenn Stevens noted in a statement that, “In Australia, the available information suggests that the economy has continued to grow over the past year, but at a rate somewhat below its longer-term average. The rate of unemployment, though elevated, has been little changed recently. Overall, the economy is likely to be operating with a degree of spare capacity for some time yet. With very slow growth in labour costs, inflation is forecast to remain consistent with the target over the next one to two years, even with a lower exchange rate.”
He further said that the Board today judged that leaving the cash rate unchanged was appropriate at this meeting. Information on economic and financial conditions to be received over the period ahead will inform the Board's assessment of the outlook and hence whether the current stance of policy will most effectively foster sustainable growth and inflation consistent with the target.
Home loans and mortgage movements
While the steady cash rate in June translated into no rate changes in the home loan market by the major banks, we did see 10 lenders increasing fixed rates for terms of three years or longer. This trend is likely to continue, which makes now a good time to fix your mortgage before your bank decides to follow suit.
According to Mozo’s database, the best fixed rates at the moment are:
- 1 year: Greater Building Society and Newcastle Permanent Building Society at 3.79%
- 2 years: Greater Building Society and Newcastle Permanent Building Society at 3.89%
- 3 years: Mortgage House at 3.94%
- 4 and 5 years: Freedomlend at 4.24%
As for variable rates, there were some more cuts thanks to the record cash cut by the RBA in May. The lowest variable rate available at the moment is 3.94% from Homestar (owner occupier refinancing with LVR up to 70%) and Mortgage House (owner occupier with LVR up to 50%).
New home loan applicants can also look at AMP, which is offering a $1,000 cashback for Professional Pack loan applications received by 30 September and settled by 30 November 2015.
If you’re still wondering what to do about your home loan and want to shop around for more options, head over to Mozo’s home loan database to compare the best offerings. You can also speak with our home loan negotiators about how to get the best home loan deal.
Savings accounts to watch out for
Even though there hasn’t been a further cut this month, with the official cash rate sitting at a record low, it is important to keep track of the changes your bank might be making to the already low savings account interest rates.
At the moment, the best ongoing rates are:
- Rural Bank ONE’s 2.75% for over $5,000 on its Saver account
- Newcastle Permanent Building Society’s 2.65% on its Online Savings Account
- AMP’s 2.60% on its Saver Account and Online Saver
- Citibank’s 2.60% on its Online Saver
If you’re looking at supersizing your savings with a bonus saver, you need to watch out because a number of providers have slashed their ongoing bonus rates.
Big four player, CBA reduced the ongoing bonus rate on its Goal Saver account to 2.90%, but kept the introductory rate on its NetBank Saver at 2.75%. NAB increased the ongoing bonus rate on its Reward Saver account to 3.05%, but left the introductory rate on its iSaver unchanged at 2.70%. Westpac increased the introductory rate on its eSaver to 3.11% and reduced the ongoing rate on its Reward Saver to 2.70%. ANZ made no changes in June.
The accounts offering the best bonus rates are:
- RAMS’ Saver at 3.60%
- ING Direct’s Savings Maximiser at 3.50%
- UBank’s USaver with Ultra at 3.37%
For the best introductory offers you can look at RaboDirect’s High Interest Saver at 3.50% and Citibank’s Online Saver at 3.40%.
With all these changes in the banking market, don’t let your hard earned cash sit in a savings account with a low interest rate. Instead search Mozo’s savings accounts hub for some of the best deals in the savings account market today.
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