RBA cuts interest rates to landmark low 1.50%

As the dust settles from Brexit and the Australian Federal Election, the Reserve Bank is shaking things up yet again, by cutting interest rates to an unprecedentedly low 1.50%.

The inflation data released in July, along with a need to promote economic growth, bolster the weak Aussie job market and keep the Aussie dollar low were cited as some of the main reasons for the cut.

In a statement, outgoing Governor Glenn Stevens said, "Low interest rates have been supporting domestic demand and the lower exchange rate since 2013 is helping the traded sector. Financial institutions are in a position to lend for worthwhile purposes. These factors are all assisting the economy to make the necessary economic adjustments, though an appreciating exchange rate could complicate this."

He added that "the likelihood of lower interest rates exacerbating risks in the housing market has diminished."

While this was by no means an unexpected outcome - at the end of last month, 24 out of 25 economists were predicting the move - some experts are already questioning whether it was the right one. They’re concerned particularly by the squeeze being put on retirees’ budgets by such low interest rates, which is likely to hinder economic activity, rather than promote it.

Exciting times for home loan borrowers

Record low interest rates are good news for at least one group - those borrowing money to buy a home are likely to see serious savings, with some providers already slashing interest rates on home loan products.

The last RBA rate cut in May saw 41 lenders pass on the full 0.25% rate reduction to customers, although others gave the rate cut the cold shoulder, passing on only partial cuts.

Our rate chasers will be keeping you in the loop about which lenders are passing on savings by updating our naughty or nice table below:

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Provider Home Loan Old
Rate
New
Rate
Effective
Date
Rate
Change
Naughty
or
Nice
ANZ Standard Variable Rate (Owner Occupier) 5.37% 5.25% 12/08/16 -0.12% thumbs-down
Aussie Optimizer Plus (LVR>90%, Principal & Interest, Owner Occupier) 4.32% 4.07% 12/08/16 -0.25% thumbs-up
Bank Australia Premium Home Loan (Owner Occupier) 4.99% 4.74% 05/08/16 -0.25% thumbs-up
Bankwest Mortgage Shredder (Owner Occupier) 5.45% 5.35% 23/08/16 -0.10% thumbs-down
Bendigo Bank Variable Rate Residential (Owner Occupier) 5.48% 5.38% 29/08/16 -0.10% thumbs-down
Beyond Bank Standard Variable Home Loan (Owner Occupier) 5.24% tba tba tba
CitiBank Standard Variable (Owner Occupier) 5.73% 5.58% 23/08/16 -0.15% thumbs-down
Commonwealth Bank Standard Variable Rate (Owner Occupier) 5.35% 5.22% 19/08/16 -0.13% thumbs-down
CUA Standard Variable Rate Loan (Owner Occupier)  4.81% 4.69% 18/08/16 -0.12% thumbs-down
Greater Bank Great Rate Home Loan (Owner Occupier) 4.39% 4.29% 08/08/16 -0.10% thumbs-down
Heritage Bank Standard Variable (Owner Occupier) 5.14% tba tba tba
HSBC Variable Home Loan (Owner Occupier) 5.35% tba tba tba
IMB Bank Standard Variable Home Loan (Owner Occupier) 5.09% 4.99% 24/08/16 -0.10% thumbs-down
ING Direct Mortgage Simplifier (Owner Occupier) 4.65% 4.55% 15/08/16 -0.10% thumbs-down
loans.com.au Offset Variable (LVR<80%, Owner Occupier) 3.89% 3.79% 12/08/16 -0.10% thumbs-down
ME Flexible Home Loan (Owner Occupier, LVR<80%) 5.03% 4.93% 23/08/16 -0.10% thumbs-down
NAB Tailored Home Loan (Owner Occupier, Principal & Interest) 5.35% 5.25% 19/08/16 -0.10% thumbs-down
Newcastle Permanent Real Options Home Loan (Owner Occupier) 5.05% 4.95% 19/08/16 -0.10% thumbs-down
RAMS Full Feature (Owner Occupier) 5.30% 5.20% 23/08/16 -0.10% thumbs-down
St.George Standard Variable Home Loan (Owner Occupier) 5.44% 5.30% 23/08/16 -0.14% thumbs-down
Suncorp Standard Variable Loan (LVR<90%, Owner Occupier) 5.50% 5.40% 24/08/16 -0.10% thumbs-down
UBank UHomeLoan (Owner Occupier, Principal & Interest) 4.07% 3.97% 19/08/16 -0.10% thumbs-down
Westpac Rocket Repay Home Loan (Principal & Interest) 5.43% 5.29% 23/08/16 -0.14% thumbs-down

Head over to our comparison tables to see the rest of the rates on offer and compare home loans side-by-side.

Savers feel the squeeze

Aussies trying to build up a nest egg or living on their savings are not nearly so lucky this month. As the Reserve Bank drops the official cash rate to yet another record low, savers will need to be on the lookout for great deals if they want to maximise the potential of their rainy day fund, and retirees in particular will need to be careful that they’re getting the most bang for their savings buck.

On average, it took lenders 16 days to pass on May’s rate cut to borrowers - and just 11 to pass it on to those stashing their money away in a savings account or term deposit. We’ll be watching to see how quickly the newest interest rate reduction is passed along.

In the meantime, here’s where to park your hard earned cash for the best return:

Best savings accounts

ProductInterest rateSpecial conditions
ME Online Savings Account3.35%Ongoing bonus rate if you make a weekly Tap & Go purchase with the debit card attached to your ME Everyday Transaction Account
Bankwest TeleNet Saver3.25%Introductory rate for the first 4 months
RaboDirect High Interest Savings Account3.25%Introductory rate for the first 4 months
P&N Bank Hi Saver3.20%Introductory rate for the first 4 months
CUA eSaver Reward3.15%When you deposit $1,000 into a CUA transaction account each month.
RAMS Saver Account3.15%With a minimum deposit of $200 and no withdrawals in the month.

Top term deposits

Term deposits have taken a beating these past few months, but here are the best rates on offer at the moment:

ProviderRateTerm
Arab Bank Australia3.10%3 months
Australian Military Bank3.25%5 months
UBan
3.01%6 months
Big Sky
3.10%2 years
Qudos Bank3.05%2 years
RaboDirect3.30%5 years

To find more great places for your stash, check out our saving accounts comparison table, and to keep up to date with the world of finance, don’t forget to subscribe to our monthly newsletter, the Mozo Banking Roundup.

Read last month's Reserve Bank interest rates update.

Home loan comparisons on Mozo

Mozo may receive payment if you click the products below. We don’t compare the entire market, but you can search our database of 473 home loans.
Last updated 21 June 2024 Important disclosures and comparison rate warning*
  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    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.

  • Basic Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    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.

  • Offset Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.39 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.

  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    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.

  • Discount Variable Home Loan

    • Owner Occupier
    • LVR<70%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    6.01 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    A low rate home loan for owner-occupiers packed with great features including unlimited extra repayments, free online redraw, no application or monthly admin fees. Rate will vary depending on LVR. Winner of a Mozo Experts Choice 2024 Low Cost Home Loan Award^

  • Variable Home Loan 90

    • Principal and Interest
    • LVR <90%
    Interest rate
    6.04 % p.a.
    Variable
    Comparison rate
    6.06 % p.a.
    Initial monthly repayment
    $3,011
    Go to site

    Affordable home loan rate for buyers or refinancers. No monthly or ongoing fees. Option to add an offset for 0.10%. Access to savings with unlimited redraws available. Minimum 10% deposit required.

  • Fixed Rate Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <80%
    Interest rate
    6.09 % p.a.
    Fixed 3 years
    Comparison rate
    6.15 % p.a.
    Initial monthly repayment
    $3,027

    Additional repayments of up to $10K per fixed year. Interest rate discounts available. Waiver of $499 application fee when combined with an Orange Advantage Home Loan.

  • The Better Home Loan Special Offer

    • Owner Occupier
    • Principal & Interest
    • LVR<80%
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.14 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Enjoy a variable rate home loan with a bunch of features from Police Credit Union. Make extra repayments at any time without penalty. No monthly, annual or upfront fees. Free online redraw. Minimum 20% deposit. Qualifying criteria applies. Minimum loan amount is 200K. For new customers only. Mozo Experts Choice Home Lender Credit Union of the Year 2023.

  • Basic Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    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.

  • Mortgage Simplifier

    • LVR<80%
    • Owner Occupier
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.17 % p.a.
    Initial monthly repayment
    $3,043

    Get a competitive variable rate with ING’s Mortgage Simplifier. Free extra repayments, no monthly or annual fees. Freedom to make free extra repayments or redraws.

  • Offset Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.39 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.

  • Basic Home Loan

    • Fixed
    • Owner Occupier
    • Principal & Interest
    • LVR<70%
    Interest rate
    6.25 % p.a.
    Fixed 3 years
    Comparison rate
    6.20 % p.a.
    Initial monthly repayment
    $3,079
    Go to site

    No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.

  • Fixed Rate

    • Owner Occupier
    • Principal & Interest
    • <80% LVR
    Interest rate
    6.59 % p.a.
    Fixed 3 years
    Comparison rate
    7.06 % p.a.
    Initial monthly repayment
    $3,190

    Enjoy up to $3000 cashback for eligible first home buyers and $2000 cashback for refinancers on eligible home loans with the ANZ Fixed Rate Home Loan. Get the security of repayment certainty with a competitive locked in rate. No ongoing fees to pay. Offset account on 1-year fixed loans ($10/month fee applies). Interest-only payments allowed.

image of houses

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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.

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.