Will the RBA cut rates in August?

Reserve Bank Governor Glenn Stevens gave the clearest indication about tomorrow's rates decision when he told a business forum last week that he saw no "serious impediments to further easing".

As growth in the mining sector continues to wane, economists hope that another cut to the official interest rate will help the Aussie dollar make a dignified descent, and boost business confidence in other parts of the economy.

All this is great news for mortgage holders who are already experiencing record low interest rates. But even if official rates drop tomorrow, it's not all champagne and celebrations as the banks may hold back on passing the full rate cut to their customers.

Why? Last week's announcement by the government to impose a 0.05% bank levy on deposits under $250,000 had the banks spooked. Although the levy won't be introduced until 2016, some pundits are already predicting the banks will look for ways to cushion the costs associated with the levy. For borrowers, this might mean that banks only pass on a partial rate cut this month

A partial cut by the big banks could fuel a switching boom, with the Big 4 facing stiff competition from smaller lenders offering stunningly low rates. Right now there are over 40 lenders offering 1 year fixed-rate loans under the 5 per cent mark.

The Greater Building Society even went as far as dropping their 1 year fixed home loan to a rock bottom 3.99% last week. So even if Glenn Stevens backflips on his statement and keeps rates on hold, you'll still be able to save big time by switching.

Whatever happens tomorrow, be sure to check back here when Mozo's Rate Chasers brings you all the action on tomorrow's Reserve Bank announcements.

Top home loans - rates updated daily

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    1.99% p.a.variable for 12 months and then 2.48% p.a. variable
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    Fixed, Owner Occupier, Principal & Interest, LVR 70-80%

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    Initial monthly repayment
    2.09% p.a.
    fixed 2 years
    2.56% p.a.

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    Celebrate Variable Home Loan

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    Initial monthly repayment
    2.19% p.a. variable
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    UHomeLoan

    Owner Occupier, Principal & Interest

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    Initial monthly repayment
    1.75% p.a.
    fixed 3 years
    2.22% p.a.

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    Discount Great Rate Home Loan (Fixed, Owner Occupier, Principal & Interest)

    LVR<90%, over $150k

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    Initial monthly repayment
    1.69% p.a.
    fixed 1 year
    3.49% p.a.

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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, loan amount and term entered. 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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