This July, the Reserve Bank has left the official cash rate on hold at a record low of 1.50%, where it’s been since August 2016.
Although there was plenty of speculation about rising interest rates in the lead up to the July announcement, economists largely expected that rates would remain on hold this month.
High levels of household debt, stagnant wages and lower than desired employment growth on one hand, combined with a number of positive economic indicators, such as a strong GDP, on the other, meant there was no particularly strong case for a change up or down.
In his statement, RBA Governor Philip Lowe said, “The Australian economy is expected to strengthen gradually, with the transition to lower levels of mining investment following the mining investment boom almost complete."
He said that while labour market indicators remain mixed, "inflation is expected to increase gradually as the economy strengthens" and that continuing low interest rates support the current economic outlook.
Experts are now debating the likelihood of the RBA following the trend set by a number of Central Banks throughout Europe, the US and the UK, by lifting rates in the coming months. While some expect this to be the case, others are still open to the chance of another rate cut, as inflation is set to rise and real estate prices may have finally hit the top limit of their growth.
A large number of experts, however, are expecting the Reserve Bank to stick to its “wait and see” policy, leaving rates on hold until 2019.
What does this mean for your home loan?
Lenders have continued shuffling rates around this month, mainly increasing rates for investors or interest-only borrowers in response to APRA's tighter restrictions. Owner-occupiers, on the other hand, have seen a few welcome rate cuts over the past month.
If you’re one of the people betting on an RBA rate hike in the coming months, you may be looking to lock in a rate now. In that case, check out some of these top fixed rate offers:
Best fixed rate home loan offers
- 1 year - 3.59% - Greater Bank (comparison rate: 4.48%)
- 2 year - 3.69% - NAB (comparison rate: 4.61%)
- 3 year - 3.59% - Easy Street (comparison rate: 4.01%)
- 4 year - 4.04% - Homestar (comparison rate: 3.73%)
- 5 year - 3.89% - Greater Bank (comparison rate: 4.18%)
If you’ve got your money on rates staying the same or dropping, a flexible variable rate home loan might be more your style. 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: 3.50%)
- FreedomLend Variable Home Loan - 3.54% (comparison rate: 3.54%)
- Reduce Home Loans Rate Buster Offset Variable - 3.54% (comparison rate: 3.56%)
- iMortgage Fusion 80 - 3.62% (comparison rate: 3.67%)
What about your savings stash?
Not a lot has changed on the savings front over the past month - and with the cash rate still on hold, savings rates are set to remain relatively low. That means those trying to build up a rainy day fund might be left feeling that they’re fighting an uphill battle.
But don’t worry! For savvy savers who know where to look, there are still some accounts that offer a decent return on your stash. Check out these top options:
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)
- ING DIRECT Savings Maximiser - 3.00% (when you also have an Orange Everyday and deposit $1,000 each month)
- RAMS Saver Account - 3.00% (with a minimum deposit of $200 and no withdrawals in the month)
Check out our savings account comparison table to see the rest of the deals in the market.
For those looking to lock in a rate, there are also a number of good value term deposits still to be found:
Best term deposits
- 1 year - 3.00% - Teachers Mutual Bank, Unibank
- 2 year - 3.10% - Qudos Bank
- 3 year - 3.20% - Qudos Bank
- 4 year - 3.20% - Greater Bank
- 5 year - 3.30% - Greater Bank, RaboDirect
Find other term deposit options with our term deposit search tool.https://mozo.com.au/home-loans/information/reduce-...
*Product no longer exists (as of 18/12/2018)