RBA holds off for another month, keeps interest rates at 1.00%

By Niko Iliakis · · 3 min read
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It looks like the Reserve Bank will be taking another breather this month. Following its September meeting, the board announced it won’t be making any changes to the cash rate, opting to keep it at 1.00%. 

RBA governor Philip Lowe revealed he expected the economy to strengthen in the future, but acknowledged several challenges.

“The persistent downside risks to the global economy combined with subdued inflation have led a number of central banks to reduce interest rates this year and further monetary easing is widely expected.”

“Economic growth in Australia over the first half of this year has been lower than earlier expected, with household consumption weighed down by a protracted period of low income growth and declining housing prices and turnover.”

Will the RBA cut rates again this year?

With the economy’s vital signs yet to show signs of improvement, Lowe has gestured towards further rate cuts in the near future to help move things in the desired direction. At the moment, October is the most likely bet.

“The RBA recognises that it’s going to have to cut rates, at least twice more, and the only reason that they’re not doing it quicker is because they don’t want to panic people,” said Mozo’s banking expert Peter Marshall.

“The first two cuts that we saw really didn’t help consumer confidence - in fact they hurt it. So the board is going to want to pace these cuts to show that they’re operating according to a plan.”

When the RBA does go ahead and pull the trigger, it would bring official interest rates down to 0.75% - half of where they sat at the beginning of the year.

A buffer of at least two months between cuts would give them time to take effect, and make sure we aren’t speeding too quickly down what’s shaping up to be a steep slope.

Where do home loan rates currently sit?

The RBA may have left official interest rates untouched this month, but the excitement surrounding home loans rates has yet to simmer down. As of writing, several lenders in our database offer variable rates near the 3.00% mark, if not lower.

Variable rate home loans (owner occupiers making P&I repayments)

LenderHome loanInterest rateComparison rate
HomestarStar Essentials Home Loan2.99% p.a.3.04% p.a.*
loans.com.auSmart Home Loan3.03% p.a.3.06% p.a.*
AthenaVariable Home Loan3.09% p.a.3.09% p.a.*
UBankUHome Loan Discount Offer3.09% p.a.3.09% p.a.*
Mortgage HouseRed Home Loan Early Bird Special3.04% p.a.3.11% p.a.*

But what can we expect when the RBA finally does make a move? If the second cut of the year is any indication, we’ve already reached a point of diminishing returns.

While most banks and lenders were clambering over one another to pass on the full cut in June, there was much less enthusiasm following July’s decision. The story will most likely be the same for any upcoming cuts.

“The banks will pass on a portion of it, something like 15-18 basis points, so they can be seen to be doing the right thing, but they won’t pass on all of it,” said Marshall.

What about savings accounts and term deposits?

As for savers, the RBA’s decision to leave interest rates untouched for another month might come as a relief, but there isn’t too much to be optimistic about down the track. Cuts to savings rates have only accelerated in the past few months, with 37 providers making reductions in August alone.

And anyone hoping to guard against dropping rates by locking in a term deposit will likely be underwhelmed by what’s on offer. Banks have been pricing future RBA cuts into their term deposit rates for months now, leaving the average one year rate at 1.75% p.a.

“Longer term rates are getting worse than medium term rates. Overall, the long-term outlook is not particularly cheery,” said Marshall.

So if you’re looking for someplace to put your savings, it’s vital you compare what’s out there. Our savings account and term deposit comparison pages are a good place to start. And if it’s home loans you’re after, be sure to visit our home loan comparison page for a look at the best value offers.

*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 the amount and term you entered.

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 compare more home loans here.
Last updated 27 July 2024 Important disclosures and comparison rate warning*

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    Initial monthly repayment
    $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.

  • Basic Home Loan

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    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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    6.11 % p.a.
    Initial monthly repayment
    $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.

  • Special Real Deal Home Loan

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    • Principal & Interest
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    Interest rate
    6.09 % p.a.
    Variable
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    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.

  • Optimum Fixed Rate Home Loan

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    $2,899
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    Lock in a competitive interest rate and enjoy peace of mind for the fixed period. Available for owner occupied new and refinanced home loans with at least 20% deposit. Split option available as well as offset and redraw. Noapplication, ongoing or banking fees. Third Party fees may be applicable - payable within loan repayments. Extra repayments up to $20K per annum permitted. Apply online, 100% member owned credit union.

  • Unloan Variable

    • Owner Occupier
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    Interest rate
    5.99 % p.a.
    Variable
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    5.90 % p.a.
    Initial monthly repayment
    $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.

  • OMG Home Loan

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    Interest rate
    5.99 % p.a.
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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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    6.34 % p.a.
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    $2,995
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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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    6.14 % p.a.
    Initial monthly repayment
    $3,001
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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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    6.09 % p.a.
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    6.11 % p.a.
    Initial monthly repayment
    $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.

  • Special Real Deal Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <80%
    Interest rate
    6.09 % p.a.
    Variable
    Comparison rate
    6.13 % p.a.
    Initial monthly repayment
    $3,027
    Go to site

    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.

  • Basic Home Loan

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    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
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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.

  • Flex Home Loan

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    6.38 % p.a.
    Initial monthly repayment
    $3,043
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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.

  • Offset Home Loan

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    6.39 % p.a.
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    $3,043
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    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

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    6.25 % p.a.
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    $3,079
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    6.25 % p.a.
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    6.42 % p.a.
    Initial monthly repayment
    $3,079
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  • Fixed Rate

    • Owner Occupier
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    • <80% LVR
    Interest rate
    6.54 % p.a.
    Fixed 2 years
    Comparison rate
    7.10 % p.a.
    Initial monthly repayment
    $3,174

    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.

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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.