Back to back cuts: The RBA drops official interest rates to 1.00%

By Niko Iliakis · · 6 min read
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In its latest meeting, the Reserve Bank has decided it will be cutting the cash rate by 0.25%, bringing it to a record low 1.00%. 

This marks the first time since 2012 that the Board has cut in consecutive months. RBA Governor, Philip Lowe said the decision comes as part of a push to support employment growth and reinvigorate a slowing economy.

"Today's decision to lower the cash rate will help make further inroads into the spare capacity in the economy. It will assist with faster progress in reducing unemployment and achieve more assured progress towards the inflation target."

"The central scenario for the Australian economy remains reasonable, with growth around trend expected. The main domestic uncertainty continues to be the outlook for consumption, although a pick-up in growth in household disposable income is expected to support spending."

RELATED: What is the cash rate and how does it affect you?

Lowe gestured towards a July cut in a speech to the Committee for Economic Development of Australia last month, indicating that unemployment figures - which have crept up as of late - had become a central concern. 

At the same time, he acknowledged that reductions to the cash rate can only do so much to stimulate the economy, and should be accompanied by sustained efforts by the government to create jobs, such as by investing in infrastructure.

“If the government was stepping in and doing other things to stimulate the economy, then perhaps the RBA would sit on its hands for a while,” said Mozo banking expert, Peter Marshall.

“But there’s no real sign that that’s happening. And with the government’s tax package still in limbo, it makes sense that we would see another cut.”

Will lenders pass on the full cut again?

Now that the axe has come down on official interest rates, the big question is whether we’ll see this flow through to variable home loan customers. We’ll be tracking changes from key lenders below, so make sure you check in periodically.

Following last month’s cut, we saw an action-packed few weeks in which 44 lenders dropped variable home loan rates, with 27 doing so by the full 0.25%.

Back then, the Royal Commission still loomed large over the banks, so there was a lot of pressure to provide relief to customers in the form of a rate reduction. 

But according to Marshall, that pressure has since eased and we’re unlikely to see a similar volume of activity this time round. 

“I think it will be on a bank by bank basis. The theory is that the closer we get to zero, the bigger the hit is to the banks’ net interest margins, and if that is the case, then they’re going to be holding back more and more of each rate cut,” he said.

For an idea of where rates currently sit, be sure to visit our comparison tables, where you’ll be able to compare fixed and variable rate home loans. And if it’s savings accounts you want to look at, head over to our savings accounts comparison page.

Read last month's Reserve Bank interest rates update.

Home loan comparisons on Mozo

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Last updated 27 July 2024 Important disclosures and comparison rate warning*

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    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.

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    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.

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    Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.

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    6.13 % p.a.
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    Refinancers or first home buyers pay no monthly or annual fees. Up to $3,000 cashback when you complete your home loan application online. $2,000 cashback on loans ≥$250K; or $3,000 cashback on loans ≥$500K. LVR ≤80%. T&Cs and credit criteria apply.

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    5.99 % p.a.
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    $2,995
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    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.

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    6.02 % p.a.
    Initial monthly repayment
    $2,995
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    BCU Bank’s OMG owner occupied home loan offers a variety of great low rates depending on your deposit. Save with no ongoing annual fees. Access your extra payments when you need to through the redraw facility. Pre-approval valid for 3 months.

  • Flex Home Loan

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    Competitive Fixed rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.

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    Get online approval from the award-winning Bendigo Bank Express Home Loan. Multiple offset accounts and redraw available. 100% offset on variable rate loans and partial offset on fixed rate. Flexible repayment options. New home loans only.

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    $3,027
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    Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.

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    Interest rate
    6.09 % p.a.
    Variable
    Comparison rate
    6.13 % p.a.
    Initial monthly repayment
    $3,027
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    Refinancers or first home buyers pay no monthly or annual fees. Up to $3,000 cashback when you complete your home loan application online. $2,000 cashback on loans ≥$250K; or $3,000 cashback on loans ≥$500K. LVR ≤80%. T&Cs and credit criteria apply.

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    Interest rate
    6.14 % p.a.
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    6.16 % p.a.
    Initial monthly repayment
    $3,043
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    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.

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    Competitive variable rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.

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  • Fixed Rate

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    Interest rate
    6.54 % p.a.
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    Initial monthly repayment
    $3,174

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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.

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