RBA interest rates steady at 1.50% for EOFY

The Reserve Bank has opted to keep the official cash rate steady at 1.50% for the ninth month in a row as the 2016/17 financial year wraps up, and economists are expecting it to stay there for a while.

Household debt has remained high while wages are stagnant around the country, and the RBA seems reluctant to makes changes in the absence of a major economic shift. The booming property market is one reason why - it’s likely the Reserve Bank will want to see a solid cooling in the market before making any significant move on interest rates.

In his statement, RBA Governor Philip Lowe said, "The outlook continues to be supported by the low level of interest rates. The depreciation of the exchange rate since 2013 has also assisted the economy in its transition following the mining investment boom. An appreciating exchange rate would complicate this adjustment."

Earlier in the year, a rate hike had seemed imminent, but experts have recently revised their opinion, with most expecting the 1.50% cash rate to last well into 2018, and some tipping the next move to be yet another decrease.

Interest-only home loans on the rise

Continuing efforts to clamp down on interest-only and investment lending by banks has meant a spate of home loan rate hikes in those areas this month. We also saw a number of lenders reduce the maximum LVR on interest-only loans.

One other notable trend is that lenders have largely stopped hiking fixed rate loans and some have even began decreasing rates. According to Mozo Data Manager Peter Marshall, this is one indicator that the banks aren’t expecting a rate hike too soon.

So there are still a few good offers around for savvy borrowers. Here’s a few to get you started:

Best fixed rate home loan offers

• 1 year - 3.59% - Greater Bank (comparison rate: 4.48%)
• 2 year - 3.64% - Newcastle Permanent (comparison rate: 4.83%)
• 3 year - 3.59% - Easy Street (comparison rate: 4.01%)
• 4 year - 3.99% - Newcastle Permanent (comparison rate: 4.72%)
• 5 year - 3.99% - Newcastle Permanent (comparison rate: 4.65%), Suncorp (comparison rate: 3.82%)
  

Best variable rate home loan offers

• Reduce Home Loans Rate Buster Variable - 3.44% (comparison rate: 3.51%)
• Homestar Owner Occupier Loan - 3.49% (comparison rate: 3.53%)
• FreedomLend Variable Home Loan - 3.54% (comparison rate: 3.55%)
• loans.com.au Essentials Variable - 3.64% (comparison rate: 3.66%)
• 3.69% - State Custodians Low Rate Home Loan with Offset (comparison rate: 3.67%), Bank of Sydney Expect More PAYG Home Loan (comparison rate: 4.10%), iMortgage Fusion (comparison rate: 4.84%).

Savings still not in a great place

There’s some bad news for savers as we wrap up this financial year - or should we say some more bad news. Savings rates have been on a downward slide for a while now, and this month saw further rate cuts to a couple of savings account offers. 

But the real story is in term deposits, which have held up reasonably well this year, until now. Rates have been cut by a number of providers over the last month. But the good news is, some providers have actually increased rates on key products. Here’s where to find the best offers:

Best term deposits

• 1 year - 3.00% - Teachers Mutual Bank, Unibank
• 2 year - 3.20% - Maitland Mutual Building Society
• 3 year - 3.40% - Maitland Mutual Building Society
• 4 year - 3.20% - Greater Bank
• 5 year - 3.30% - Greater Bank

Find other term deposit options with our term deposit search tool.

Best savings accounts

• ME Online Savings Account - 3.05% (when you make a weekly Tap & Go purchase with your ME Everyday Transaction Account Debit MasterCard)
• AMP Bett3r Save Account - 3.00% (with a minimum deposit of $2,000 per month into linked Bett3r Pay Account)
• Australian Unity Active Saver - 3.00% (with a minimum deposit of $250 and no withdrawals in the month)
• ING DIRECT Savings Maximiser - 3.00% (when you also have an Orange Everyday and deposit $1,000 each month)
• Newcastle Permanent Smart Saver Account - 3.00% (when you increase the account balance by $150 (excluding interest) and make no more than two withdrawals in the month)
• RAMS Saver Account - 3.00% (with a minimum deposit of $200 and no withdrawals in the month)

Check out our savings account comparison table to see the rest of the deals in the market.