July RBA decision: Official cash rate untouched at 1.50%

As Benjamin Franklin once wrote, "...in this world nothing can be said to be certain, except death and taxes,” but the old idiom could well be in need of updating, with the RBA board yet again showing their consistency by maintaining interest rates at a record low 1.50%.

The decision handed down in Sydney this afternoon marks a twenty-first straight hold from the RBA, which now hasn’t made a change to the official cash rate since a rate cut back in August 2016.

In his monetary policy decision statement RBA Governor, Philip Lowe, highlighted strong GDP growth in the March quarter, positive employment growth and low levels of inflation as factors that contributed towards the board's decision to hold. 

"The low level of interest rates is continuing to support the Australian economy. Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual," he said. 

RELATED: Why home loan rates are going up

According to Mozo Product Data Manager, Peter Marshall, the latest hold from the RBA comes as no surprise given the state of the key economic indicators, with little prospect of any move in either direction in the near future.

“If we do get more rate increases from the banks and the economy’s strength continues to be below expectations, there’s potential that the RBA could cut interest rates to counterbalance some of those out-of-cycle increases. But that seems less likely than a long period with no change eventually followed by some increases,” he said. 

Mortgage rates are on the move (and heading north)  

While the latest RBA decision is hardly likely to raise any eyebrows, it does further highlight the widening gap between the official cash rate and rising variable home loan rates. Figures from the Mozo database show that six lenders have recently hiked variable home loan rates, or have signalled that they plan to do so in the near future. 

According to Marshall, the rate increases are in part down to the increased funding pressure Australian banks are facing as a result of rising interest rates in Europe and the United States, as well as an unusually high Bank Bill Swap Rate at home.

But while interest rate rises will be an unwelcome hit to some household budgets, there could be a larger problem for mortgage holders.

“I think the biggest area of concern is not interest rates, but credit availability. The banks have been tightening their credit assessment procedures which makes it harder for people to get loans or refinance,” said Marshall.

“There are a growing number of people who will find that they’re not able to shift from one lender to another, as well as those on interest only loans who will find that they are denied a further interest only period.”

Best variable rate home loan offers

• BIDeloan SMARTeloan - 3.39% (comparison rate: 3.74%)
• Reduce Home Loans Rate Lovers Variable Home Loan - 3.44% (comparison rate: 3.51%)
• Easy Street Standard Variable - 3.49% (comparison rate: 3.52%)
• Freedomlend Variable Home Loan - 3.49% (comparison rate: 3.54%)
• 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)

• Easy Street Special 3 Year Fixed - 3.69% (comparison rate: 4.11%)
• UBank UHomeloan Fixed - 3.74% (comparison rate: 4.01%)
• Freedomlend Fixed Home Loan - 3.79% (comparison rate: 4.28%)
• IMB Bank Fixed Home Loan - 3.79% (comparison rate: 4.76%)
• Teachers Mutual Bank Fixed Option Home Loan - 3.79% (comparison rate: 4.99%)
• UniBank Fixed Option Home Loan - 3.79% (comparison rate: 4.99%)

Term deposits ticking up

While the outlook won’t look so rosy for some homeowners, the continued uptick in term deposit rates could be good news for Australians looking to make a return on their savings.     

Figures from the Mozo database reveal that term deposit rate increases heavily outweighed decreases in the month of June, with offers in the 1-3 year term deposit categories now at their highest points since late last year.

On the other hand savings account rates remain relatively unchanged, with an increase to Citi’s four month introductory rate to 3.05% and a sprinkling of rate reductions among the changes over the past month.   

Read on below for some of the best term deposit and savings account offers currently* in the Mozo database:

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

• 1 Year: 2.85% - AMP, ING
• 2 Year: 3.00% - Greater Bank, ING, Maitland Mutual
• 3 Year: 3.05% - Greater Bank, Maitland Mutual
• 4 Year: 3.30% - RaboDirect
• 5 Year: 3.50% - RaboDirect
  

Best ongoing savings account offers

• RAMS Saver Account - 3.00% (if you deposit a at least $200 and make no withdrawals each month)
• UBank USaver with Ultra Transaction Account - 2.87% (if you deposit a minimum $200 into the account or a linked Ultra Transaction Account each month)
• ME Online Savings Account - 2.85% (if you make a weekly tap and go purchase using your linked ME Everyday Transaction Account Debit MasterCard)
• Australian Unity Active Saver - 2.80% (if you make a minimum deposit of at least $250 and no withdrawals every month)
• Coastline Credit Union Bonus Reward Saver - 2.80% (if you make a minimum deposit of $20 and make no withdrawals within the month)
• ING Savings Maximiser - 2.80% (if 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: New financial year sparks home loan discounting frenzy

Interested in comparing more great offers? Mozo’s handy home loan, term deposit and savings account comparison tables could help you land a better deal today. 

*Rates accurate as of July 3, 2018.