RBA interest rates on hold at 1.50% for August

The Reserve Bank has opted to leave interest rates on hold at 1.50% yet again this month, amid concerns about household debt and stagnant wages.

Although the RBA itself has been paving the way for future rate hikes, experts overwhelmingly expected today’s result. Even Reserve Bank Governor Philip Lowe recently poured cold water on the suggestion of a rate hike so soon, despite a global trend toward higher interest rates.

Australia’s sluggish wage growth and high level of household debt remain concerns for the RBA, keeping rates steady for now, even as inflation numbers dropped in the last quarter.

In his statement, Lowe said, “Wage growth remains subdued in most countries, as does core inflation.”

He added that, "the Bank's forecasts for the Australian economy are largely unchanged. Over the next couple of years, the central forecast is for the economy to grow at an annual rate of around 3 per cent."

There hasn’t been a change in interest rates since last August, when the RBA cut to the historic low of 1.50%, but many experts are expecting a rise at the end of this year, or at some point in 2018.

What does this mean for your home loan?

Although the cash rate is on hold for now, some lenders have continued to hike their home loan rates out of cycle over the past month. In particular, there’s a clear trend at the moment of lenders raising rates for borrowers making interest only repayments, while principal and interest loans have seen small rate cuts.

If you want to avoid out of cycle rate hikes for a while, a fixed rate loan might be for you. Check out these top offers:

Best fixed rate home loan offers

  • 1 year - 3.59% - Greater Bank (comparison rate: 4.48%)
  • 2 year - 3.69% - NAB (comparison rate: 4.85%)3 year - 3.69% - Auswide (comparison rate: 4.32%), SCU (comparison rate: 4.70%)
  • 4 year - 4.19% - Greater Bank (comparison rate: 4.55%)
  • 5 year - 3.89% - Greater Bank (comparison rate: 4.43%)

Prefer the flexibility of a variable rate on your home loan? Here are some of the top offers at the moment:

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%)
  • Reduce Home Loans Rate Buster Offset Variable - 3.54% (comparison rate: 3.60%)
  • iMortgage Fusion 80 - 3.62% (comparison rate: 3.77%)

Savings rates on the decline

Savers are still getting the short end of the stick, with interest rates low and staying there for now. In fact, this month a number of providers cut rates further on both savings accounts and term deposits, so Aussies looking to build up their stash will be eagerly awaiting the promised rate rises.

But until then, there are still some accounts offering a decent return on your rainy day fund. Take a look at these top offers:

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)RAMS Saver Account - 3.00% (with a minimum deposit of $200 and no withdrawals in the month)
  • P&N Bank Hi Saver - 2.95% (for the first 4 months after opening the account)

Check out our savings account comparison table to find other great options.

Although rates on term deposits are also declining, there are still a number of good value offers out there:

Best term deposits

Check out other great term deposit options with our term deposit search tool.

Read last month's Reserve Bank interest rates update.

Top home loans - last updated 25 May 2024

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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.

^See information about the Mozo Experts Choice Home Loan Awards

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