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RBA Rate Updates

4.00pm, 18 March 2020: Emergency rate cut 100% certainty TOMORROW

The Reserve Bank of Australia (RBA) is meeting on Thursday this week (19 March) to discuss further stimulus measures to combat the economic impact of the coronavirus.

The prime minister today announced a second economic stimulus and support package, just one week after announcing $17 billion in cash payments, wage subsidies and business support.

The RBA meeting, two weeks ahead of the regular scheduled meeting, will discuss  the “inevitability” of an emergency rate cut. The RBA is now expected to slash the official cash rate to 0.25 per cent this week. Futures markets have priced in a 100% certainty of a cut by April (see update below).

Share markets staged a small rally this afternoon to finish less than five per cent down in Australia for the day.


18 March 2020: Lockdown Australia

“Do not go overseas – that is a very clear instruction.”

The prime minister has told Australians to stop travelling overseas. The Australian government has issued a level four “Do Not Travel” warning to every country in the world for the first time ever.

“For those thinking about going overseas in the school holidays, don’t,” said Mr Morrison in a special media conference today on the Coronavirus.

“Don’t go overseas.

“We are looking at a situation of at least six months.”

Virgin Australia has suspended all international flights. Qantas has cut 90 per cent of seats available and has issued a warning that it may lay off employees.

Businesses, such as hotels, bars and restaurants are banned from hosting more than 100 people.

This ban applies to indoor, non-essential gatherings only said the prime minister Scott Morrison in a media conference on Wednesday.

Mr Morrison urged families and businesses to cancel overseas travel and stay at home.

“Life is changing all around the world. This is a once-in-a-100-year event,” said Mr Morrison.

“We are going to keep Australia running.”

Everyone should remain 1.5 metres away from all other people as much as possible but children should continue to attend school.

“The health advice is that schools should remain open.”

Mr Morrison announced support for airlines and the lifting of work restrictions to bring more nurses into hospitals.

The Chief Health Officer, Professor Brendan Murphy, said there were 454 cases of coronavirus in Australia (18 March).

“The majority of new cases are still imported cases or direct contacts of imported cases.”

“We have to be in this for the long haul, we have to have sustainable measures but they have to be serious.

ScoMo’s second stimulus package fails to calm markets

Prime Minister Scott Morrison’s second economic stimulus emergency package of measures announced this morning has failed to reassure investors on the ASX.

The ASX S&P 200 has fallen 5.39% in morning trade to 5008 points (down 285 points). The All Ordinaries has fallen 5% to 5061 points (down 271 points).

Among the big losers today are Afterpay (APT), down $4.91 or 25% to $14.15 and Southern Cross Media (SXL) down 17% to 36 cents.

Another coronavirus rate cut coming tomorrow


Economists are tipping another rate cut from the Reserve Bank of Australia as soon as tomorrow, Thursday the 19 March.

The RBA governor, Dr Philip Lowe announced an unscheduled RBA board meeting and further stimulatory measures to be announced on Thursday 19 March 2020.

Keep up to date with the latest trending financial news at InfoChoice.

Compare home loan rates at InfoChoice.


Limits placed on ASX share trading as crash continues …

The ASX, Australia’s share markets exchange, has experienced has experienced record trading volumes in the last two weeks as investors try to sell, and grab bargains, as the market falls.

Friday the 13th March was a particularly heavy trading day leading to a huge backlog “of work required to be undertaken over the weekend by the exchanges and trading participants,” said the Australian Securities and Exchange Commission.

Now ASIC has stepped in to place enforceable limits on share trading in Australia. Major brokerages are now required to ensure they limit the number of trades per day does not rise above 75% of the volumes they processed the 13th of March 2020.

“If the number of trades executed continues to increase,” said ASIC in a statement to the market this morning, “It will put strain on the processing and risk management capabilities of market infrastructure and market participants.”

“We do not expect these limits to impact the ability of retail consumers to execute trades,” said ASIC.

ASIC said it will continue “to closely monitor market conditions and take action where needed to ensure markets remain fair and orderly.”

The ASX fell sharply on Monday, with the ASX S&P200 index down almost 7%, or 381 points by 2pm. The All Ordinaries Index is down over 6%.

Keep up to date with the latest economic news and interest rate outlook at InfoChoice.


Emergency statement from the Governor of the Reserve Bank

The governor of the Reserve Bank of Australia, Dr Philip Lowe, has just announced a huge new economic stimulus for Australia as it seeks to fight off the impact of the coronavirus.

The RBA will pump money into the economy in an alternative monetary policy known as quantitative easing.

“As Australia's financial system adjusts to the coronavirus (COVID-19), financial regulators and the Australian Government are working closely together to help ensure that Australia's financial markets continue to operate effectively and that credit is available to households and businesses…,” said Dr Lowe.

The Reserve Bank will buy government bonds from other investors and will inject more funds into its bond program in the next few months.

Dr Lowe said the RBA will be announcing “further policy measures to support the Australian economy on Thursday.”

The Reserve Bank is expected to cut interest rates in April by another 0.25 percentage points to 0.25%. Sydney futures markets traded all last week at a price indicating a 100% expectation of a RBA rate cut in April.

Australian share markets are in freefall

Share trading on the ASX has levelled off after 11 am after steep falls amid panic selling on Monday morning. The ASX S&P 200 has lost 5.35%, falling 296 points to around 5250 this morning (16 March 2020).

Big losers include Cochlear (COH), Netwealth (NWL) and Atlas Arteria (ALX), all down more than 16%.

Wall Street futures markets hit downside limits on Monday morning (Australian time) indicating widespread expectation of a big sell-off when US markets open for the new week of trading. The futures markets crashed despite a huge emergency rate cut announced by the US Federal Reserve on Sunday (US time).  The US Federal Reserve made a big 1.5 percentage point cut to 0.25%.


ASX is crashing on Friday 13 March

The Australian Stock Exchange is recording big losses as investors continue to bail out of markets worldwide.

The ASX S&P 200 index of the top 200 listed companies in Australia is down 251 points or 4.73% in the first hour of trading on Friday the 13th. The All Ordinaries is down 294 points or 5.55%.

Big losers include Sydney Airport (SYD) down 98 cents (16%) to $5.09. Resolute (RSG) is down $1.13 (15%) to $0.62.

Overnight, share markets in the USA and Europe crashed in the biggest global share sell-off since 1987.

The FTSE 100 index of top UK companies listed on the London Stock Exchange lost 10.87% and the Dow Jones Index of stocks on the New York Stock Exchange closed down 10% to 21,200.

The US Federal Reserve announced a US$1.5 trillion bond buying program to inject money into markets.

“Today has been utterly brutal,” said Neil Wilson from Markets.com.

“Markets are at breaking point … over the coronavirus.”

Coronavirus Update 13 March 2020

There are now 125,288 confirmed cases of the Novel Coronavirus COVID-19 worldwide according to the World Health Organisation.

4,614 people have died from coronavirus as at today 13 March 2020. The virus originated in Wuhan province in China in late 2019. China is the country that has the most confirmed coronavirus cases but the disease has now spread to 118 countries globally.

Countries with the most coronavirus infections are:

China: 80981 coronavirus cases

Italy: 12462 coronavirus cases

Iran: 9000 coronavirus cases

South Korea: 7983 coronavirus cases

France: 2281 coronavirus cases

Spain: 2140 coronavirus cases

Germany: 1567 coronavirus cases

USA: 987 coronavirus cases

Switzerland: 815 coronavirus cases

Cruise ship Diamond Princess: 696 coronavirus cases

Japan: 620 coronavirus cases

Australia has 122 confirmed cases of coronavirus on 13 March 2020.

Keep up to date with coronavirus and its impact on the economy and interest rates at InfoChoice.


12 March 2020: ASX share market crashes

Investors reacted badly to Scott Morrison’s coronavirus economic stimulus package today. Share prices plunged in the minutes and hours after the prime minister announced his $17 billion cash injection into businesses and families.

The stimulus package was announced at 10.30am. By 1pm the ASX All Ordinaries index had lost 300 points. By close of the day the All Ordinaries was down 7.8% or 418 points. The S&P ASX 200 fell 7.9% or 421 points to 5304 by close of trade.

Among the big falls was Flight Centre (FLT), down $4.37 (18.2%) to $19.61 and Webjet (WEB) down $1.36 (19.7%) to $5.56.

The table below is from ASX.com.au:

Another RBA rate cut is coming in April

ASX Futures markets have now priced in a 100% expectation of another RBA rate cut of 0.25% in April. That would take the official cash rate in Australia to just 0.25%. The market has been trading at this price all week.

Overnight the Bank of England cut the UK’s official ‘base’ interest rate by 0.5% to just 0.25%.

The bank’s monetary policy committee voted unanimously to slash the base rate at its first unscheduled meeting since the 2008 financial crisis. The Bank of England co-ordinated this cut with a stimulus package from the Chancellor of the Exchequer, Rishi Sunak.

The Bank of England governor, Mark Carney, said the package of rate cuts and government spending was “a big package, a big deal.” The governor said the bank was acting with other central banks around the world and governments “in a way that makes it clear that we are going to bridge a situation, as opposed to allowing it to be turned into something worse.”


11 March 2020: Coronavirus and interest rates.

Is Australia going into a recession?

The prime minister Scott Morrison has foreshadowed an economic stimulus package to address the growing impact on Australia from the spreading Coronavirus COVID-19. Some economists are predicting Australia will see a recession in the near future – 2020 or 2021. Other indicators look more positive for the economy. Chinese forward economic indicators show a slowdown but perhaps the start, already, of a recovery.

Today the assistant governor of the RBA signalled more rate cuts are coming soon due to the growing impact of the Coronavirus on Australia.

“Policy interest rates have been reduced in some countries, including Australia, and further reductions are expected where that is possible,” said Guy Debelle.

The US will cut rates again next week according to market pricing.

Coronavirus and Australia

The Assistant Governor of the Reserve Bank of Australia, Guy Debelle, told a conference this week that the coronavirus was having a big impact on Chinese manufacturing and that could flow through to Australian exports and jobs. Mr Debelle showed the graph below of coal consumption in China as a forward indicator of a probably economic slowdown to come.

Guy Debelle also pointed to improved traffic conditions in China as an indicator of the Chinese industrial slowdown in 2020. The Chinese traffic congestion index shows a big drop this year in the numbers of people on China’s roads, many of whom are going to and from work or driving around on business. Fewer cars on the road in China is bad economic news for Australia, said Guy Debelle.

“The coal consumption graph shows the regular significant decline in production around Chinese New Year,” said Mr Debelle.

“But this year, the return to normal production has been significantly delayed.

“Losing a substantial amount of output over a period of several weeks implies a significant hit to economic activity. The road congestion graph (Graph 2) tells a similar story of a protracted period of low output.”

Both graphs also show a delayed return to normal has begun said Mr Debelle, which is good news for the Australian economy.

Nevertheless, Guy Debelle was clear. The Coronavirus is hurting the world and the Australian economy.

“The global economy will be materially weaker in the first quarter of 2020 and in the period ahead,” said Mr Debelle.

Disruption in the tourism and higher education sectors as travellers and Chinese and other foreign students are stopped from returning to Australia will hit the final national GDP by half of one percent said Mr Debelle.

Further reductions in interest rates “are expected where that is possible” said Mr Debelle.

Coronavirus leads to share market panic

“Equity prices have fallen by as much as 20 per cent since their all-time peak of less than a month ago,” said Guy Debelle “Although the Australian market rebounded on Tuesday.”  (See graph 7 below).

“The falls have been particularly large for companies in the oil sector, as well as tourism.”

Why is the RBA cutting interest rates?

How does cutting interest rates help the economy and Australia battle the growing impact of the Coronavirus COVID-19?

“The virus is a shock to both demand and supply,” said RBA Assistant Governor Guy Debelle today.

“Monetary policy (interest rates) does not have an effect on the supply side, but can work to ensure demand is stronger.

“Lower interest rates will provide more disposable income to the household sector and those businesses with debt.

“They may not spend it straight away, but it brings forward the day when they will be comfortable with their balance sheets and resume a normal pattern of spending,” said Mr Debelle.

“Monetary policy also works through the exchange rate (of the Australian dollar) which will help mitigate the effect of the virus' impact on external demand.”


Rate update: 6 March 2020

More countries cut rates as coronavirus spreads


Hong Kong’s Monetary Authority (HKMA) moved on Wednesday to follow the USA’s Federal Reserve half point interest rate cut. Malaysia also cut rates raising pressure on China to ease its central bank rates in response to the coronavirus. China’s central Bank rate is 4.05%, well above trading partners such as the USA, Europe and Australia. See below for more countries that have cut rates this week and why the US federal reserve cut rates.

Coronavirus Update:

There are now 95,270 confirmed cases of coronavirus infection worldwide, according to the World Health Organisation.

The number of cases identified in Italy has jumped substantially to 3089.  South Korea has 5,766 cases. Australia has 43 confirmed cases (6 March 2020) and New Zealand has two. The Australian government has announced travel restrictions on people coming in from South Korea.

More banks cut home loan rates

More banks and home loan providers have announced rates cuts since the Reserve bank cut rates by 0.25% on Tuesday. Go to a full list of banks that have cut their home loan rates at InfoChoice.

Term deposit rates come down

Judo Bank has announced rate cuts on its market leading range of terms. My Life My Finance has also cut TD rates by up to 0.30% pa.

Judo Bank still has the highest 6 and 12-month term deposit rates listed on InfoChoice and the highest term deposit rate in Australia, listed on InfoChoice.

Go direct to Judo Bank’s term deposit rate information at InfoChoice.


Interest rate update – 5 March 2020

Most banks and other home lenders in Australia have moved quickly to cut rates on their variable home loans for owner occupiers since the RBA rate cut of Tuesday 3 March.

A full list of lenders that have cut their home loan rates this week is at InfoChoice.

The prime minister Scott Morrison held a press conference this morning to update Australians on the growing coronavirus pandemic.

In a sign of just how serious central banks around the world believe the coronavirus COVID-19 issue to be, the US joined Australia in cutting interest rates this week.

Why did the USA cut interest rates?

The US Federal Reserve made its biggest rate cut since 2008 this week. The move came hours after finance ministers and central bankers from the Group of Seven economies agreed to “take actions, including fiscal measures where appropriate“.

The US rate was slashed by half of a percentage point, with markets already betting the Fed could cut rates by another quarter point later this month. However the US cut didn’t have a great effect on markets.

US equities tanked 3% following the surprise 50-basis-point cut. It seems investors expected a more creative, or impactful solution to remedy disrupted supply chain problems.

Which countries are cutting interest rates?

In addition to rate cuts in Australia and the USA this week, the Bank of Canada cut its interest rate by half a percentage point to 1.25 per cent on Wednesday. That brought the Canadian central bank rate down from 1.75 per cent in direct response to the economic impact of the COVID-19 outbreak.

The European Central Bank and Bank of Japan also cut interest rates this week – into negative territory.

The question is, will this stimulate the economy and how much impact can monetary policy actually have?  Some leading economists say the outlook doesn’t look good.

“If this (coronavirus) turns into a pandemic that engulfs the United States, it’s pretty difficult to envision the U.S. economy getting through without a full-blown economic recession,” said Moody’s chief economist Mark Zandi.

“Which means the entire global economy will be in recession.”


2.30pm 3 March 2020: RBA cuts rates to new historic low

The Reserve Bank of Australia has cut the official overnight cash rate (OCR) in Australia by 0.25 percentage points to a new historic low of 0.50 percentage points.

“Not all banks and lenders will pass on this rate cut in full,” said Vadim Taube, chief executive of InfoChoice.

Non-bank Athena Home Loans has already announced that it will pass on the full 0.25% rate cut to its retail home loan borrowers. Athena says “as quickly as we can” they will cut their home loan rates for new and existing customers. The new Athena rates are as follows:

Athena Home Loans new rates:

OO P&I – 2.59% (2.55% CR)

OO IO – 3.09% (2.74% CR)

INV P&I – 2.99% (2.95% CR)

INV IO – 3.09% (2.99% CR)

Check out Athena Home Loans rates and fees information at InfoChoice.

More updates and analysis on the RBA’s historic March 2020 rate cut coming soon.

The coronavirus rate cut

This is the coronavirus rate cut.

The Reserve Bank board decided to lower the cash rate by 0.25 percentage points to 0.50 per cent today, 3 March 2020.

Why did the RBA cut interest rates?

This cut is all about responding to the global coronavirus outbreak, said Dr Philip Lowe in his statement today.

“The coronavirus has clouded the near-term outlook for the global economy,” said Dr Lowe.

“Global growth in the first half of 2020 will be lower than earlier expected.”

Coronavirus is already hurting the Australian education and travel industries said Dr Lowe.

Australia depends on China as the biggest customer of our exports. A slowdown in manufacturing, already appearing in economic indicators out of China, will affect exports and trade.

China has more cases of coronavirus than any other country.

Which countries have the most coronavirus cases?

The Reserve Bank has cut rates in response to spreading coronavirus fears. China, Australia’s biggest trading partner is most severely affected by coronavirus but other countries also have thousands of people diagnosed with the deadly disease. Coronavirus kills between 1% and 2% of people who become infected.

Based on the latest updates (3 March 2020)  from the World Health Organisation the countries with the most confirmed cases of coronavirus (COVID-19) are:

Top ten countries for coronavirus:

China: 80,174 confirmed coronavirus cases.

South Korea: 4212

Italy: 1689

Iran: 1501

Cruise ship Diamond Princess: 706

Japan: 254

Germany: 150

Singapore: 108

France: 100

USA: 62

Australia has 33 cases of confirmed coronavirus COVID-19.

What did the RBA’s Philip Lowe tell the government?

The RBA’s governor Dr Philip Lowe reportedly met with the treasurer and prime minister over the weekend to discuss the growing impact of the coronavirus.

In the governor’s statement today, Dr Lowe indicated that policy action from government might be needed in the near future.

“The Australian Government has also indicated that it will assist areas of the economy most affected by the coronavirus.”

To business and employer, Dr Lowe was even clearer: Australia needs wages growth to achieve stable economic growth, because unemployment is rising and wages growth is low.

Unemployment is rising in Australia

The unemployment rate increased in January 2020 to 5.3 per cent said the RBA and has been around 5.25 since April 2019.

Wages growth in Australia “remains subdued” and the outlook for wages is much the same going forward.

A gradual lift in wages “would be a welcome development” said the RBA and is “needed” if the RBA is to reach its inflation target.

Rates outlook for 2020: One more rate cut to come

Dr Lowe has previously indicated a lower bound for interest rates in Australia of about 0.25% so the RBA board is unlikely to cut rates to zero.

Today the RBA’s statement was clear: expect another rate cut if the coronavirus spreads.

The RBA board said it will “continue to monitor developments closely and to assess the implications of the coronavirus for the economy.”

“The Board is prepared to ease monetary policy further.”


Rates update 26 February 2020: Could coronavirus trigger interest rate cuts?

The Reserve Bank of Australia (RBA) will meet next week to decide on whether to keep interest rates on hold.

While rates are likely to remain at a record low of 0.75 per cent, world events, most notably the coronavirus, could have an impact on the RBA’s future decisions.

The virus has crippled markets this week and traders are predicting that coronavirus will force central banks globally to do what many said they wouldn’t: cut rates.

“A global pandemic would likely have persistent impacts on global demand as well as lengthy effects on supply chains and trade – more U-shaped than V-shaped – that may well call for a monetary policy response,” Krishna Guha and Ernie Tedeschi, analysts at Evercore ISI, wrote in a note Monday.

deVere Group’s chief executive and founder, Nigel Green says, “Global financial markets retreated on Monday as they reacted to the coronavirus headlines over the weekend.

“Major global companies, especially those with heavy exposure to the Chinese economy, are lowering profit guidances due to the outbreak. This will have a knock-on effect across international supply chains and throughout economies. 

“In addition, coronavirus has struck at a time when major economies, including Japan, Germany, India and Hong Kong are facing a downturn due to other factors such as the U.S.-China trade dispute and political protestors, which could hit the world economy.”

Bloomberg has reported that traders are expecting at least two cuts. 

Traders are pricing in a total of 205 basis points of interest-rate cuts from seven major central banks by the end of the year, up three-fold from the end of 2019, according to calculations based on Bloomberg’s World Interest Rate Probability.

“Investors now see the U.S. Federal Reserve reducing rates at least twice this year, and are pricing in a minimum of one cut by central banks in Australia, New Zealand, Canada and the U.K.

They assign at least a 50% chance that the Bank of Japan and European Central Bank may follow suit.”

We will know if the RBA moves on interest rates on Tuesday based on the language they use.

As Nikko AM reports, any negative language could lead to a cut:

Of course, whether the banks would pass on a rate cut remains to be seen but considering the major four are quietly cutting interest rates on savings, it is highly unlikely.

Compare home loan rates at InfoChoice.

Keep up to date with the latest property market outlook at InfoChoice.

The products compared in this article are chosen from a range of offers available to us and are not representative of all the products available in the market and influenced by a range of factors including interest rates, product costs and commercial and sponsorship arrangements

InfoChoice compares financial products from 145 banks, credit unions and other financial institutions in Australia. InfoChoice does not compare every product in the market. Some institutions may have a commercial partnership with InfoChoice. Rates are provided by partners and taken from financial institutions websites. We believe all information to be accurate on the date published. InfoChoice strives to update and keep information as accurate as possible.

The information contained on this web site is general in nature and does not take into account your personal situation. Do not interpret the listing order as an endorsement or recommendation from us.  You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.


RBA Rate Update: 18 February 2020

The Reserve Bank has revealed its Australian economic outlook for 2020 and the outlook for interest rates in Australia in 2020 and 2021.

World economic outlook for 2020

The RBA board members noted, in their meeting last week that the International Monetary Fund has upgraded the outlook for the global economy in 2020.

“The easing in trade tensions between the US and China and ongoing stimulus delivered by central banks, had supported a modest improvement in the growth outlook for a number of economies,” said the RBA board meeting minutes, released today.

The RBA said coronavirus is “a new source of uncertainty” for the world economy while tensions between the US and China were ongoing and still posed a risk to growth.

Economic Outlook for China 2020: Activity indicators up in December quarter suggesting stimulatory policies working, said the RBA.

Economic Outlook for east Asia 2020: Signs of a turnaround in global electronics and stimulatory government policies

Economic outlook for the USA 2020: The RBA said housing investment is up thanks to lower interest rates in the United States while business borrowing intentions had stabilised.

Economic outlook for Japan 2020: Japanese economic activity had slowed after tax rises in October 2019 but fiscal stimulus is expected to support growth said the RBA

Economic outlook for the Euro area 2020: In Europe, manufacturing investment  remained weak said the RBA.

Will coronavirus affect the economy?

The Reserve Bank of Australia is concerned that the coronavirus outbreak centred in China’s Wuhan province could impact upon the Chinese, world and Australian economies. Growth forecasts for Australia have already been revised down for the December and march quarters and looking ahead in 2020, partly because of the coronavirus said the RBA today.

Dr Philip Lowe, the governor of the RBA and the other board members decided that it is still too early to tell how far coronavirus would spread or what the “international spillovers” could be.

China is now much more integrated into the world economy than during the previous SARS outbreak in 2003. That integration is not just with the rest of the world but particularly with Australia, noted the RBA members.

“The economic effects [of coronavirus] depend crucially on the persistence of the outbreak and measures taken to contain its spread,” said the RBA in board meeting minutes released today.

The coronavirus outbreak is expected to subtract from growth in Australian exports over the first half of 2020 said the Reserve Bank.

Economic Outlook for Australia 2020

The Australian economy grew modestly in the September quarter said the Reserve Bank of Australia in minutes released today.

Growth is being driven by public spending and exports. Household spending and investment as well as the farm sector remain weak said the RBA.

Bushfires are impacting many rural communities and will impact on GDP numbers for the December and March quarters said the RBA.

However, bushfire recovery will add to growth in the second half of 2020 and GDP numbers are still expected to improve from 2.75% growth rates expected this year to 3% over 2021 said the RBA.

For households and family budgets, the RBA is less confident about the financial outlook in 2020 and 2021.

The recovery in consumption [is] less certain,” said the RBA minutes.

Have Aussies given up on wage rises?

Household consumption data was lower than expected in the September 2-19 quarter despite tax offset payments and lower interest rates, reported the RBA today.

The downturn in the housing market has reduced the average households' wealth in Australia said the RBA.

The extended period of weak growth in wages has “probably lowered expectations of future income growth.”

That means Australians may have largely given up on any wage rises in the foreseeable future and that negative outlook is affecting spending.

“The prolonged period of slow growth in income was expected to continue to weigh on consumption over coming quarters.”

Instead of spending their money, Australians are saving and paying down debt, in an ominous sign that they are not particularly confident about the economic outlook for 2020 and 2021.

“Recent data … suggested that households were directing more income to saving and reducing their debt.”

On a positive note, the RBA said increased house prices are expected to make Aussies feel better about their own situations over the next year.

“Higher housing prices and the associated increase in housing turnover were expected to support consumption and dwelling investment.”

Black Friday now taking business from Christmas

What is Black Friday?

Black Friday is the day after Thanksgiving (last Thursday in November), a national holiday tradition in the United States of America.

Black Friday has become a celebration of shopping with retailers holding massive sales and discounting popular big-ticket items on this date.

The Black Friday tradition has been adopted in recent years by Australian retailers and shoppers – and the Reserve Bank of Australia has noticed.

So many Australians are now doing their Christmas shopping on Black Friday that retail sales data is being affected.

“Nominal retail sales …increased strongly in the month of November,” said the RBA today “Much of this increase was likely to have been purchases brought forward to take advantage of ‘Black Friday’ sales.”

Who are the members of the Reserve Bank board?

Are you interested in who decides on interest rates in Australia? The board members of the Reserve Bank of Australia decide on the official overnight cash rate (OCR) for Australia on the first Tuesday of each month.

The OCR is the interest rate that banks pay the RBA and each other for overnight loans used to manage their cash flows. That rate determines the advertised interest rate that banks and other lenders charge their retail borrowing customers on home loans and other credit products.

Who are the current board members of the RBA?

The current board of the RBA is chaired by the governor of the RBA Dr Philip Lowe.

Other board members are:

Guy Debelle (Deputy RBA Governor),

Mark Barnaba AM,

Wendy Craik AM,

Ian Harper,

Steven Kennedy PSM,

Carol Schwartz AO,

Catherine Tanna

Allan Moss AO

The Board decided to leave the cash rate unchanged at 0.75 per cent in February 2020.

Compare home loan interest rates at InfoChoice.

Keep up to date with the latest property market outlook from InfoChoice.

Read the latest trending financial news daily at InfoChoice.

This article is general news and information, not financial advice.

The products compared in this article are chosen from a range of offers available to us and are not representative of all the products available in the market and influenced by a range of factors including interest rates, product costs and commercial and sponsorship arrangements

InfoChoice compares financial products from 145 banks, credit unions and other financial institutions in Australia. InfoChoice does not compare every product in the market. Some institutions may have a commercial partnership with InfoChoice. Rates are provided by partners and taken from financial institutions websites. We believe all information to be accurate on the date published. InfoChoice strives to update and keep information as accurate as possible.

The information contained on this web site is general in nature and does not take into account your personal situation. Do not interpret the listing order as an endorsement or recommendation from us.  You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.


Are these the lowest rates we will EVER see?

The Reserve Bank of Australia did not cut rates, as expected in February and may leave rates unchanged for the foreseeable future.

Economic experts are putting back their previously predicted timelines for RBA rate cuts in 2020. One prominent commentator has boldly claimed we have seen the last rate cut from the RBA in this economic cycle. That means that the current interest rates in Australia are the lowest they will ever be.

“Interest rates in Australia might be the lowest they will ever be.”

Many economists had expected the RBA to cut rates in February, March and/or April and end up with the low point at 0.25% in about May 2020.

But slightly improved jobs and inflation data and changing signals from the RBA have moderated those expectations.

As at Monday the 10 February, the ASX 30 Day Interbank Cash Rate Futures market was indicating just an 11% expectation of an interest rate decrease to 0.50% at the next RBA Board meeting.

The current RBA rate of 0.75% could now be the bottom of the range.

The Reserve Bank left its official interest rate unchanged, as I told you it would a week ago.

“Any further rate cuts would tell us the economy was in deep, deep trouble,” wrote leading News Limited economics columnist Terry McCrann last week.

But the RBA is expecting to rates unchanged pretty well into the foreseeable future, through 2020 and into 2021.

Growth in the economy is currently 2.75 per cent and expected to strengthen to 3 per cent with unemployment falling slightly to below 5 per cent. Inflation is now expected to approach the RBA’s target of 2 per cent.

In the housing and home loans markets there is also renewed optimism.

“House price growth and lower interest rates are supporting market confidence,” said Angela Lillicrap, an economist with eh Housing Industry Association.

“The housing market reached a turning point mid-way through 2019,” said Ms Lillicrap, and has been rising ever since.

Lending to first home buyers increased by 6.2 per cent in December 2019 to be up by 3.6 per cent for the quarter according to the Australian Bureau of Statistics.

Lending to owner occupiers for the purchase of a new home increased by 4.9 per cent in the December quarter.

This chart (from HIA) shows the trough in home lending in mid-2019.

In New South Wales, lending to owner-occupiers for new dwellings increased in the December quarter by 6.3 per cent, while Victoria was up 6.2 per cent.

The ACT was the busiest state or territory on the three months ending 31 December, with new home activity up 39.9 per cent, followed by South Australia (+15.6 per cent), Queensland (+12.7 per cent) and the Northern Territory (+6.7 per cent). New South Wales (+6.3 per cent), Victoria (+6.2 per cent) and Western Australia (+4.7 per cent) also increased in the December quarter.

Only Tasmania saw new home lending decline, down 12.2 per cent in the quarter.

Another rate cut now could indicate the Reserve Bank has little confidence on the economy, which would be at odds with recent positive data. But the lack of major improvements in unemployment and weak retail and business investment data means that rate rises are extremely unlikely.

The RBA’s governor, Dr Philip Lowe has previously indicated that rate cuts become less effective as a stimulus measure the lower they go. With improving economic conditions, the RBA now seems reluctant to go lower than 0.75%. Going below this current level could impact on brittle consumer confidence and that could mean – expect NO more rate cuts from the Reserve Bank of Australia in 2020.

In fact, there is now no reason to expect that the RBA might cut rates further at all. Current signals seem to be, steady as she goes.

Compare home loan rates from Australia’s banks, credit unions and other institutions at InfoChoice.

This article is news and information, not financial advice.

InfoChoice compares financial products from 145 banks, credit unions and other financial institutions in Australia. InfoChoice does not compare every product in the market. Some institutions may have a commercial partnership with InfoChoice. Rates are provided by partners and taken from financial institutions websites. We believe all information to be accurate on the date published. InfoChoice strives to update and keep information as accurate as possible.

The information contained on this web site is general in nature and does not take into account your personal situation. Do not interpret the listing order as an endorsement or recommendation from us.  You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.


Reserve Bank reveals rates outlook for 2020

The Reserve Bank of Australia yesterday decided to leave the official Australian cash rate unchanged for February at 0.75%.

Futures markets had priced in a very low expectation of the RBA cutting rates in February after better than expected unemployment data was released last week.

Outlook for Interest Rates in 2020

The outlook for interest rates in Australia in 2020 has been outlined by the board of the RBA in its monthly statement for February, the first statement from the central bank board in 2020.

The Reserve Bank statement for February outlined the board’s view that the Australian economy will continue to improve in 2020 despite bushfires, coronavirus fears and international trade disputes.

The RBA board concluded hat Australians should expect a long period of low interest rates with the RBA being prepared to cut rates again if needed.

Global Economic Outlook for 2020:

The outlook for the global economy remains reasonable according to the Reserve Bank of Australia.

“Global growth is expected to be a little stronger this year and next.”

“One continuing source of uncertainty, despite recent progress, is the trade and technology dispute between the US and China,” said the RBA board.

“Another source of uncertainty is the coronavirus.

“Interest rates are very low around the world,” noted the RBA, “There is an expectation of a little further monetary easing in some economies.

“The Australian dollar is around its lowest level over recent times.”

Australian economic outlook 2020:

The Australian economy will grow by around 2.75% this year, rising to 3 per cent next year,” predicts the Reserve Bank of Australia.

“In the short term, bushfires and coronavirus will temporarily weigh on domestic growth.

“The overall outlook is also being supported by the low level of interest rates, recent tax refunds, ongoing spending on infrastructure, a brighter outlook for the resources sector and, later this year, an expected recovery in residential construction,” said the RBA in its February Monetary Policy Statement.

Unemployment is expected to remain at around 5.1% “for some time” said the RBA.

Wages growth is also expected to remain subdued. “A further gradual lift in wages growth would be a welcome development,” said the RBA.

CPI inflation is expected to rise from an underlying rate of 1.8% in December to around 2 per cent over the next two years.

Property Market outlook 2020

There are continuing signs of a pick-up in established housing markets especially in Sydney and Melbourne said the RBA board.

New mortgage loan commitments have also picked up, “mortgage rates are at record lows and there is strong competition for borrowers of high credit quality.”

Lower interest rates have helped households balance their budgets and boosted house prices said the RBA which will in time lead to increased residential construction activity.

RBA’s interest rate outlook for 2020:

The Reserve Bank board has issued a statement this week telling Australians to expect low interest rates to remain in place for a long time to come yet.

Banks and other lenders have clearly heard the central bank’s advice and are cutting fixed rate home loan rates. One lender now has fixed rates for up to three years set at 2.44% pa (comparison rate 3.50% pa).

“Due to both global and domestic factors, it is reasonable to expect that an extended period of low interest rates will be required,” said the RBA.

The RBA Board said it “remains prepared to ease monetary policy further if needed.”

That means – expect more rate cuts from the Reserve Bank of Australia in 2020.

Compare home loan rates from Australia’s banks, credit unions and other institutions at InfoChoice.

This article is news and information, not financial advice.

InfoChoice compares financial products from 145 banks, credit unions and other financial institutions in Australia. InfoChoice does not compare every product in the market. Some institutions may have a commercial partnership with InfoChoice. Rates are provided by partners and taken from financial institutions websites. We believe all information to be accurate on the date published. InfoChoice strives to update and keep information as accurate as possible.

The information contained on this web site is general in nature and does not take into account your personal situation. Do not interpret the listing order as an endorsement or recommendation from us.  You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.


What are the chances of a February rate cut?

Chances of a rate cut have dipped, according to futures markets trading, in late week trading before the Australia Day weekend. But are rising again this week has Coronavirus fear grips global share markets.

Rate Update: Expectations have turned against a cut

Expectations were trending around 56 per cent for a week or so before crashing last Thursday and Friday after the Australian Bureau of Statistics reported that Australian’s current unemployment rate is 5.1 per cent.

The stronger than expected employment numbers released last week slashed expectations of a further stimulatory rate cut. Unemployment fell to 0.1 percentage in December, down from 5.2 per cent in November 2019 and 5.3 per cent in October, as more jobs than predicted were created.

The actual number of unemployed people in Australia now (Dec 2019, according to the ABS) is 693,100, a fall of 12,900 since November 2019.

There are 8,834,700 full-time employed working people in Australia, according to the Australian Bureau of Statistics which released the data on 23 January 2020. Australia lost 300 full-time jobs in December but part-time employment picked up by 29,200 to 4,146,900 people.

Australia’s underemployment rate remained steady in December 2019 at 8.3 per cent. This is a measure of people who would like more hours or more work.

The RBA has set 4.5 per cent unemployment as its ‘full employment’ target.

Coronavirus fear raises rate cut expectations

This week the ASX nosedived on Monday before recovering later as it followed Wall Street and other international exchanges through a series of Coronavirus induced sell-offs.

Falls on the ASX and other sharemarkets have been reflected in rising expectations of a rate cut on interest rates futures markets.

On Tuesday and Wednesday the 28th and 29th of January 2020, the market priced in a 30% expectation of a cut to 0.5%, up from 19% last Friday.

Compare 1800 home loans from Australia’s banks and other lenders at InfoChoice and keep up to date with the latest trending financial news.


Corona Virus adds to RBA’s worries

Global markets have been shaken by fears surrounding the spreading deadly contagious Corona Virus.

The Corona Virus is hitting Wuhan Province in China which has been placed in isolation by the Chinese government, with isolated cases appearing throughout other major cities in the world.

Fears around the Corona Virus have hit the share market in Australia. Markets around the world have fallen over the last few days.

The ASX opened sharply lower on Tuesday 28th January after the Australia Day holiday weekend. The ASX’s S&P 200 index lost 110 points (1.58%) in the first half hour of trading on Tuesday. The market has continued

Wall Street’s Dow Jones industrial average index fell 1.57% on Monday 27th January on the back of Corona Virus fears.

80 people have died from the highly contagious virus with five confirmed cases of infection in Australia. The Reserve Bank will make a decision about interest rates on 4th February.

The RBA expected to cut interest rates in February

The Reserve Bank of Australia board will next meet on Tuesday 4th February. The RBA board is expected to cut the official cash rate in Australia from 0.75% to 0.50%.

The latest trading on Sydney rates futures markets indicates a 58% expectation of a 0.25% rate cut in February.

Banks and lenders have already begun cutting fixed rates.

Westpac has cut rates for investors and Bank Australia has announced a new lowest home loan rate in Australia, as listed on InfoChoice.

More interest rates cuts are expected in the next few, whether the RBA moves or not. The RBA governor Dr Philip Lowe has already signalled a ‘lower rates for longer’ outlook for 2020.

Whether the cuts start in February or later, the markets have factored in lower rates and the banks have begun adjusting their longer fixed rates down. So banks themselves are betting on low rates for the next few years.

Climate change and interest rates

Climate change is now considered a major risk to the economy of Australia and other major countries. The Reserve Bank has been told by the International Monetary Fund it may have to step in with extraordinary measures and save Australia’s economy and environment from climate change induced disaster.

The International Monetary Fund says global warming is now a major financial risk that can’t be ignored by government and the Reserve Bank. The RBA might even be forced to spend many billions of dollars to buyout coal mines, power stations and other carbon intensive assets – to save the environment whilst keeping the economy from collapsing said the IMF.

Carbon intensive expensive economic assets such as coal-fired power stations are under threat from becoming ‘stranded assets.’

Stranded because their value depends on their ability to keep operating which is increasingly under question as climate change accelerates. If they lose their value, often many hundreds of millions of dollars or more, investors and companies could lose their money, affecting markets and economic stability. Pictured below is the Yallourn Coal Fired Power Plant in Victoria, Australia.

“Weather-related disasters such as tropical storms, floods, heatwaves, droughts, and wildfires” have hurt many people in many countries in the last few years said the IMF.

“Climate change, the driver of the increased frequency and intensity of weather-related disasters, already endangers health and economic outcomes,” said the IMF in its world economic outlook for 2020.

Climate change will not just affect the weather said the IMF, it could contribute to increased cross-border migration and financial stress.

The other big factors impacting on the economic outlook for 2020 are rising geopolitical tensions and higher tariff barriers between China and the USA, said the IMF.

Tension between the United States and Iran could disrupt the global oil supply and hurt business investment said the IMF.

Intensifying social unrest in many countries could also drag world economic growth lower. Protests and clashes between police and activists are affecting the world economic outlook for 2020 according to the IMF.

The increasing numbers of protests and unrest in many countries indicates an “erosion of trust in established institutions and lack of representation in governance” said the IMF.

For Australia in 2020, the IMF expects Real GDP to grow by 2.3% and CPI inflation to tick up to 1.8% from 1.7% now.

Compare home loan rates and keep up to date with the latest property market outlook in Australia at InfoChoice.

The products compared in this article are chosen from a range of offers available to us and are not representative of all the products available in the market and influenced by a range of factors including interest rates, product costs and commercial and sponsorship arrangements

InfoChoice compares financial products from 145 banks, credit unions and other financial institutions in Australia. InfoChoice does not compare every product in the market. Some institutions may have a commercial partnership with InfoChoice. Rates are provided by partners and taken from financial institutions websites. We believe all information to be accurate on the date published. InfoChoice strives to update and keep information as accurate as possible.

The information contained on this web site is general in nature and does not take into account your personal situation. Do not interpret the listing order as an endorsement or recommendation from us.  You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.


February rate cut to spark new mortgage rate war

Some banks and other home lenders have recently announced big cuts to home loan rates and others are expected to follow soon.

An RBA rate cut in February could spark off a market wide rate cutting battle between the big banks. The big four have been relatively relaxed about letting some of the smaller online low-cost lenders undercut their rates but those days may be over.

Whether all of the low-rate, online home lenders can compete with the majors in a serious rate slashing war is under question.

Lowest mortgage rates in Australia

The lowest home loan rates in Australia are traditionally offered by low cost non-bank lenders but the big banks are flexing their muscle and announcing some highly competitive deals.

Right now in January 2020, the lowest home loan rates listed on InfoChoice’s database of 1800 home loans from 145 Australian banks and other lenders are:

Lowest variable rate home loan for owner-occupiers (P&I), January 2020

The lowest variable home loan rate in Australia in January 2020 listed on InfoChoice is Reduce Home Loan’s Low Rider Variable home loan with a current rate of 2.69 per cent pa (comparison rate 2.71 per cent pa) on a maximum 80% LVR.

Lowest fixed-rate home loan for owner-occupiers (P&I), January 2020

The lowest fixed home loan rate now listed on InfoChoice is Bank Australia’s Clean Energy Home Loan for LVRs under 70% three-year fixed rate of 2.44 per cent pa (comparison rate 3.43 per cent pa).

Lowest fixed-rate home loan for investors (P&I), January 2020

The UBank UHomeLoan Fixed (INV, P&I) has a three-year rate of 2.84 per cent pa (comparison rate 3.59 per cent pa), no up-front fees and a maximum LVR of 80%.

Westpac cuts investment home loan rates

Westpac, along with Commonwealth Bank, dominates the investor home loan market. For generations, Westpac has been a leading Australian landlord lender.

In recent years, Westpac and the other big banks have let the low-cost smaller lenders grab market share by competing on price. But some of those smaller lenders must now be getting nervous because Westpac has jumped to a leading position in the low-rate home loan market.

Westpac is also competing hard on price in the owner-occupier home loan market with some super low rates. Westpac missed out on being a part of the federal government’s First Home Loan Deposit Scheme (FHLDS) but is clearly striving for increased market share with super-low loan rates.

Commonwealth Bank and NAB have likewise announced some new low-rate home loan deals for owner-occupiers, to go with their participation in the FHLDS.

Yesterday Westpac announced what could be a major escalation in the rate cutting battle breaking out in the Australian mortgage market.

Westpac has decreased Fixed Rate Investment Property Loan Interest Rates on the Premier Advantage Package for both Principal & Interest and Interest Only repayment loans.

Current rates will be cut by 0.50 percentage points (for P&I customers) on the one, four and five-year fixed terms while the popular two and three-year terms will fall by 0.19 percentage points.

On interest-only loans, current rates will be cut by 0.40 percentage points on the one, four and five-year fixed terms while the two and three-year terms will fall by 0.20 percentage points. Go straight to more information on Westpac home loan interest rates at InfoChoice.

Westpac’s current lowest rate advertised on InfoChoice for investors is 2.99 per cent pa (comparison rate 4.13 per cent pa) for a two-year fixed P&I loan.

Westpac’s current lowest rate on InfoChoice for owner-occupiers is 2.88 per cent pa (comparison rate 3.71 per cent pa) on three-year fixed P&I loans. That puts Westpac, a big four bank in the

Interest rate outlook: Rates set to tumble in February

Interest rates on home loans and savings accounts are set to fall again in February 2020. The Reserve Bank is expected to cut rates by 0.25 percentage points as soon as 4th February.

Futures markets have currently priced in a 58% expectation of a cut to 0.50% by the RBA in February.

Market expectations of a rate cut have risen following bushfires in Queensland, NSW, Victoria and South Australia (scroll down to see article below).

Keep up to date with the latest property market outlook and compare 1800 home loans from Australia’s banks, credit unions and other mortgage lenders at InfoChoice.

The products compared in this article are chosen from a range of offers available to us and are not representative of all the products available in the market and influenced by a range of factors including interest rates, product costs and commercial and sponsorship arrangements

InfoChoice compares financial products from 145 banks, credit unions and other financial institutions in Australia. InfoChoice does not compare every product in the market. Some institutions may have a commercial partnership with InfoChoice. Rates are provided by partners and taken from financial institutions websites. We believe all information to be accurate on the date published. InfoChoice strives to update and keep information as accurate as possible.

The information contained on this web site is general in nature and does not take into account your personal situation. Do not interpret the listing order as an endorsement or recommendation from us.  You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.


Interest rate forecast: Bushfires will spark another rate cut from RBA

For most city dwelling Australians, the bushfires affect only their air quality and views. But the bushfires are devastating families, communities, farms and businesses in vast areas of Australia. The Reserve Bank is increasingly expected to respond with an immediate rate cut in February.

International markets are also noticing what is going on in Australia. The Australian dollar has fallen one cent in value against the US dollar as the bushfires continue to burn across four states and grip the world’s media.

Foreign exchange investors are now bailing out of the Aussie dollar, effectively betting that Australia’s 2019/20 bushfires will damage the economy. Gains by the Australian dollar over the last six months now look fragile.

Analysts are telling international investors to get out of the Australian currency and this is increasingly expected to spur the Reserve Bank towards cutting rates again, as soon as 4th February.

The fires could hit consumer sentiment, spending, tourism, business investment, productivity and primary industries in affected regions, also  weighing heavily on RBA Board member’s minds.

Another cut in rates would provide a small stimulus in difficult economic times and would, in turn, encourage a lower Aussie dollar, benefiting primary industry exporters in particular.


(Chart of A$ vs US$ over 6 months from macrotrends.com).

Bushfires push the Aussie Dollar lower

The Australian dollar is trading this morning (Tuesday 14 January) at just over 69 US cents, down from over US 70 cents on 31 December 2019.

Forex strategist at OCBC Bank in Singapore, Terence Wu, has told his clients to short-sell the Aussie dollar suggesting it will keep falling to just over US 67 cents.

“The fires are definitely an additional weight on the economy, and should lower the barriers for an RBA rate cut,” Terence Wu told Guardian Australia yesterday.

Will the RBA cut interest rates in February?

Markets are still undecided about whether the RBA will cut official interest rates in Australia in February 2020. However, in recent days, prices are increasingly indicating a growing chance of a cut.

Yesterday, rates futures markets had priced in a 47 per cent chance of a February rate cut to 0.50 per cent, up from 42 per cent the previous trading day.

Rates futures market trading over the Christmas and New Year’s period has fluctuated significantly. Traders had priced in a 60 per cent chance of a rate cut as recently as last Wednesday, the 8th January.

The fires are a factor encouraging a February rate cut from the RBA said National Australia Bank’s head of foreign exchange trading, Ray Attrill, who told Guardian Australia that he expects a RBA rate cut to 0.50 per cent in February.

“It’s certainly been a factor and that has been reflected in money market pricing.”

Bushfire insurance costs climb

Direct costs of the bushfires include the $700 million insurance payout currently being processed by Australia’s insurers and the $2 billion bing spent by government.

Crisis talks between the Australia’s insurers and the government have produced a commitment to work together and centralise rebuilding works. The insurers have committed to dealing with claims from homeowners, almost 9,000 already, compassionately and quickly.

The Insurance Council (ICA) and senior executives from IAG, Suncorp. QBE, Allianz, Zurich, Commonwealth Bank and Westpac met last week with Federal Treasurer Josh Frydenberg.

“The Insurance Council reassured Treasurer Frydenberg that the industry is harnessing all resources to help customers,” said Rob Whelan from the ICA.

“The industry welcomed in principle the Commonwealth’s $2 billion commitment towards recovery efforts.”

Rob Whelan reiterated that insurers are dealing compassionately and sensitively with customers.

The ICA reported that insurers have received 8985 claims since September from New South Wales, Victoria, Queensland and South Australia.

Many more claims are expected to come in coming weeks. Insurance losses stand at $700 million.

The Insurance Council’s disaster hotline is 1800 734 621.

The Reserve Bank’s official Overnight Cash Rate (OCR) is currently set at an all-time low of 0.75 per cent. The board of the RBA next meets to decide on monetary policy (rates) settings on Tuesday 4th February.

Keep up to date with the latest property market outlook at InfoChoice.

Keep up to date with the latest trending financial news about Australia’s banks and other financial institutions at InfoChoice.

Compare 1800 home loans from Australia’s banks, credit unions and other lenders at InfoChoice.

This article is not financial advice.

InfoChoice compares financial products from 145 banks, credit unions and other financial institutions in Australia. InfoChoice does not compare every product in the market. Some institutions may have a commercial partnership with InfoChoice. Rates are provided by partners and taken from financial institutions websites. We believe all information to be accurate on the date published. InfoChoice strives to update and keep information as accurate as possible.

The information contained on this web site is general in nature and does not take into account your personal situation. Do not interpret the listing order as an endorsement or recommendation from us.  You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.


InfoChoice Interest Rate Outlook for January 2020.

Markets vote for a February rate cut

Futures markets are increasingly expecting the Reserve Bank of Australia to cut rates to a new historic low in February 2020.

The RBA has been on its traditional summer break in January. The board of the RBA will next meet on Tuesday the 4th of February 2020. Currently the official cash rate in Australia is set at 0.75 per cent. (charts from RBA.gov.au)

The ASX RBA Rate Indicator, based on rates futures market trading, has risen to a 53% expectation of a rate cut to 0.50% in February, up from 35% on 23 December 2019.

The Australian dollar has been fairly strong against the US dollar for more than a year broadly within a band between about 69 and 71 and US cents.

Within that range, the Aussie has recovered ground against the US dollar in November and December 2019, after falling consistently throughout the first half of last year. The Aussie Dollar bottomed out mid year in the 67 cent range.

New unemployment data will inform the next RBA decision. The last quarterly numbers released by the Australian Bureau of Statistics had 5.3 per cent of Australian adults unemployed. Underemployment remained steady at 8.4 per cent and is trending up slightly ( 0.1%) in one year.

With markets expecting a cut, perhaps only big unexpected good news on the unemployment front could stop the RBA from a February rate cut.

RBA focuses on owner-occupier home loan repayments

What does the RBA take into consideration when deciding on interest rates?

The Reserve Bank of Australia’s primary goals are to try and achieve zero or close to zero unemployment in Australia and low inflation around 2 to 3 per cent.

Every month the RBA board looks at the international and domestic economy and forecasts for the future to try and determine the best setting for interest rates – to stimulate demand or restrict credit.

At the last meeting of the RBA board, in December 2019, the members discussed how rate cuts in 2019 had flowed through to lower borrowing rates for households. 

Average variable mortgage rates actually being paid by ordinary Aussie borrowers declined by 0.65 percentage points in 6 months from mid 2019, said the board.

If that is the average, some Aussies found savings well in excess of that, presumably.

A 0.65 per centre rate reduction on a home loan can reduce monthly repayments by more than $100 on a $300,000, 25 year, no fee mortgage according to the InfoChoice Home Loan Comparison  Calculator.

Competition among lenders for high-quality borrowers remains strong said the RBA and households continue to switch away from interest-only loans to principal-and-interest loans – with lower interest rates. 

Owner occupiers are coming back to housing markets said the RBA but investor loan sales are still in decline.

Are you paying more than you need to be on your home loan?

Only a small share of Australian home loan borrowers have actively adjusted their scheduled mortgage repayments, following multiple  reductions in interest rates during 2019, the RBA board noted in December.

That means that while their lender reduced their minimum required repayments, most borrowers did not actively reduce their actual repayments to match. While most borrowers are consequently ahead on their repayments, saving interest and being responsible, they are paying more than they need to be paying.

Some borrowers may not not realise they can lower their repayments when their lender cuts their interest rates for existing borrowers.

Most lenders cut interest rates multiple times in 2019 following three rate cuts from the Reserve Bank of Australia.

This habit of not reducing repayments following rate cuts is “consistent with historical experience” said the RBA board but it doesn’t mean families are getting rid of their debt.

Even over the longer term, as interest rates had decline, borrowers have not been paying down their home loans more quickly than in the past said the RBA board. 

So that may mean that owner occupiers are topping up their available credit level with bigger homes, bigger loans, refinancing debts from holidays and cars into their loans and managing their affairs with their loans and debts under their available limits.

Mortgage payments, as a share of aggregate household income, have remained steady over recent years, noted the RBA board.

That could indicate that homeowners are keeping their debts and using them as a tool for spending, credit, cash flow and savings. Rate cuts from the Reserve Bank are just another factor in the decision making by families about where they should move their available revenue – debts, spending, bills, investments or savings.

Compare 1800 home loans from Australia’s banks, credit unions and other lenders at InfoChoice.

Keep up to date with trending financial news and the latest property market outlook at InfoChoice.

This article is not financial advice. Seek personal professional advice before making financial decisions.

The products compared in this website and this article are chosen from a range of offers available to us and are not representative of all the products available in the market and influenced by a range of factors including interest rates, product costs and commercial and sponsorship arrangements

InfoChoice compares financial products from 145 banks, credit unions and other financial institutions in Australia. InfoChoice does not compare every product in the market. Some institutions may have a commercial partnership with InfoChoice. Rates are provided by partners and taken from financial institutions websites. We believe all information to be accurate on the date published. InfoChoice strives to update and keep information as accurate as possible.

The information contained on this web site is general in nature and does not take into account your personal situation. Do not interpret the listing order as an endorsement or recommendation from us.  You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.


What is quantitative easing?

The Reserve Bank has set interest rates at an all-time record low of just 0.75 per cent. The RBA board will not meet again to decide on rates until February 2020.

The governor of the RBA, Dr Philip Lowe has said recently that the central bank may cut rates again, perhaps twice but will not go beyond 0.25 per cent.

Below that level, the RBA will look at alternative policy options to stimulate demand in the economy.

Those alternatives are often referred to as quantitative easing.

You’ve probably heard of it but you may still be asking yourself what quantitative easing is. Many people understand it as money printing, but it’s not as simple as that.

What does quantitative easing mean?

QE is when a country’s central bank increases the amount of money available within the system or economy. New money has to be created, which is where the “printing money” idea comes from, and then introduced into the economy, but it has to be done within a set process and in response to adverse economic events.

Financial crises happen occasionally and they can lead to unstable prices and interest rates, as well as inflation, deflation and even recession. Countries have a few weapons against these crises and their outcomes, with their central banks deciding what to do, how to do it and when. If a situation is deemed to be serious enough, then more controversial policies can be brought into play. QE is seen as controversial and also something of a big gun.

Why does the RBA raise and cut interest rates?

All countries have at the heart of their money systems their central bank; in Australia, it’s the Reserve Bank of Australia. This bank manages the nation’s currency by keeping inflation as low as possible and by striving to keep the prices of goods and services stable.

A monetary policy is the set of strategies designed and used by a central bank to control and manage the country’s money supply. Policies are usually either expansionary (low interest rates) or contractionary (high interest rates), depending on the biggest concerns of the day.

If there’s high unemployment and low levels of capital investment then the central bank will use expansionary policies to kickstart economic growth. If there’s too much inflation, then the central bank will go contractionary. The bank will seek to increase or decrease (expand or contract) the domestic money supply to keep the economy active.

What are the “traditional levers” central banks use?

The more traditional ways of managing the country’s money supply include buying and selling government bonds, purchasing private sector debt and moving interbank interest rates. Government bonds are loans to the government and are considered low risk and expansionary because the government uses the money in the community. Large companies and banks also issue bonds.

Sometimes negative interest rates are introduced, but this is quite rare and it means that lenders are paying borrowers to borrow! Most of the time these methods work, but when economies are under a lot of stress, QE is brought in instead.

The process of quantitative easing

If a central bank decides to bring in QE, then the first step is to create new money. No physical money is created (or printed), though; it’s created as balance sheet credits, AKA “central bank reserves”. These reserves are kept by the central bank until it decides how to put the reserves into circulation.

One way to introduce the reserves into the economy is to make large asset purchases from the public and private sectors. Buying government – issued bonds, corporate bonds and similar assets on behalf of the central bank is the route by which the new capital enters circulation.

The central bank can also increase the money supply by issuing loans directly to commercial banks. These new central reserves are passed over to the commercial banks to lend to private sector clients. This stimulates economic growth – businesses open, grow, hire more staff and so on as a result of this increased lending.

It looks controversial, but the aims of QE are very basic and simple. It aims to encourage economic growth and positive activity by making more capital available to the credit market. It also encourages lending by ensuring low interbank interest rates.

Has QE ever been used in Australia?

No, Australia has never used QE, but it may well do towards the end of 2019 or the very beginning of 2020. The RBA has lowered the cash rate to historically low levels and yet economic growth has stalled in recent months. Usually, lowering interest rates encourages economic activity because it costs less for individuals and businesses to borrow money.

When there’s cheaper credit available, enterprises start up and grow and unemployment comes down. In most of Europe the unemployment rate is around three per cent, but Australia’s jobless rate is hovering around five per cent. Even a drop in the cash rate to 0.75 per cent hasn’t created new jobs, so the next move on the part of the RBA is probably a round of QE. This could be a better alternative to lowering the cash rate even further, as eventually the RBA will run out of road and Australia could see negative interest rates. Very low or negative rates discourage savers and can lead to a lack of care among businesses – they’re being paid to borrow, so might go overboard.

Could QE be the answer to Australia’s current stagnation?

The simple answer is that there is no one simple answer to a complex and sometimes unnerving economic situation. Different sectors and even different economists will disagree on the subject and on how effective they think QE is.

Fans of QE, however, see it as a handy tool for kickstarting or rejuvenating a flagging economy. If there’s serious reluctance to reducing interest rates further and if unemployment and growth are problematic, pouring more capital into an economy can get things moving. The resulting devaluation of a currency is also a good thing, according to many economists, as it can lead to more exports and international trade.

Keep up to date with the latest property market outlook at InfoChoice.

Compare home loans from Australia’s banks and other lenders.

The products compared in this article are chosen from a range of offers available to us and are not representative of all the products available in the market and influenced by a range of factors including interest rates, product costs and commercial and sponsorship arrangements

InfoChoice compares financial products from 145 banks, credit unions and other financial institutions in Australia. InfoChoice does not compare every product in the market. Some institutions may have a commercial partnership with InfoChoice. Rates are provided by partners and taken from financial institutions websites. We believe all information to be accurate on the date published. InfoChoice strives to update and keep information as accurate as possible.

The information contained on this web site is general in nature and does not take into account your personal situation. Do not interpret the listing order as an endorsement or recommendation from us.  You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.



RBA Australian Interest Rate Update 3 December 2019

RBA leaves rates at 0.75%

The Reserve Bank of Australia has left the Official Overnight Cash Rate (OCR) unchanged at 0.75 per cent. The RBA board met today, Tuesday 3 December and announced no change to the Overnight Cash Rate (OCR). ASX interest rates futures markets had priced in a 9 per cent expectation of a cut in December

The governor of the RBA, Dr Philip Lowe gave an upbeat assessment of the economy.

“After a soft patch in the second half of last year, the Australian economy appears to have reached a gentle turning point,” said Dr Lowe.

“The central scenario is for growth to pick up gradually to around 3 per cent in 2021.

“The low level of interest rates, recent tax cuts, ongoing spending on infrastructure, the upswing in housing prices and a brighter outlook for the resources sector should all support growth.”

Unemployment is expected to remain above 5 per cent until 2021 said Dr Lowe while inflation may pick up to around 2 per cent in 2020/21.

Housing markets are turning around, led by Sydney and Melbourne said Dr Lowe 

“Mortgage rates are at record lows and there is strong competition for borrowers of high credit quality.”

Dr Lowe said the RBA board wanted to wait and see what the effects of previous rate cuts will be on the Australian economy.

“The Board decided to hold the cash rate steady at this meeting while it continues to monitor developments, including in the labour market.

“It was reasonable to expect that an extended period of low interest rates will be required in Australia to reach full employment and achieve the inflation target.

“The Board is prepared to ease monetary policy further if needed.”

Despite the pause in RBA rate cuts, banks, credit unions and other lenders are still slicing rates and adjusting deals.

Borrowers can now lock in a fixed mortgage rate under 3 per cent for up to five years.

“There are now twenty-eight home loans with advertised fixed five-year rates under three per cent listed on InfoChoice,”said Vadim Taube, CEO of leading Australian financial comparison site InfoChoice.com.au.

“A standout in the fixed rate market is UBank’s 2.69% pa (comparison rate 3.19% pa) for three years,” said Vadim Taube.

The products compared in this article are chosen from a range of offers available to us and are not representative of all the products available in the market and influenced by a range of factors including interest rates, product costs and commercial and sponsorship arrangements

InfoChoice compares financial products from 145 banks, credit unions and other financial institutions in Australia. InfoChoice does not compare every product in the market. Some institutions may have a commercial partnership with InfoChoice. Rates are provided by partners and taken from financial institutions websites. We believe all information to be accurate on the date published. InfoChoice strives to update and keep information as accurate as possible.

The information contained on this web site is general in nature and does not take into account your personal situation. Do not interpret the listing order as an endorsement or recommendation from us.  You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.


RBA Australian Interest Rate Update 21 November 2019

RBA prepared to take rates closer to zero

Interest rates could go even lower as the board of the Reserve Bank mulls over how to kick start the Australian economy, without much success so far.

Currently markets have priced in a 31 per cent chance of a rate cut of 0.25 percentage points to 0.50 per cent from the Reserve Bank at its next board meeting on Tuesday 3 December.

The RBA was very tempted to announce a rate cut in November, minutes of the previous board meeting reveal.

“The Board agreed that a case could be made to ease monetary policy at this meeting,” read the minutes released yesterday.

“But that the most appropriate approach would be to maintain the current stance of monetary policy and to make another full assessment once more evidence of the effects of the earlier monetary easing had become available.”

Further rate cuts could also undermine public confidence in the economy, suggested the board.

While lower interest rates are supporting the economy by lowering the exchange rate, lifting house prices and giving borrowers higher cash flows, any more rate cuts could have negative effects on savers and confidence said the RBA board.

Savings account and term deposit rate cuts have totalled between 0.60 and 0.70 percentage points on average, as the RBA lowered official rates by 0.75 percentage points in three cuts since June.

One quarter of all deposits held by Australians in banks is now earning between 0 and 0.50 percentage points. Most deposits are still earning 1 per cent or above said the RBA.

Home loan rates have fallen about 0.60 percentage points in total since the RBA started cutting rates in June.

The Sydney and Melbourne housing markets continue to strengthen said the RBA board while housing market conditions remain weak in Perth and Darwin. Sydney and Melbourne housing prices have been trending higher since June 2019 with auction volumes and clearance rates at relatively high levels.

Despite improving conditions in property markets, residential building activity is not growing said the RBA.

“The risks to growth from dwelling investment were tilted to the downside,” said the RBA board.

Residential building approvals declined in the September quarter and were more than 20 per cent lower over the year. Meanwhile commercial building activity is increasing as is mining related activity. Conditions remain tough for farmers though, said the RBA board and the outlook for rural exports has been downgraded.

The unemployment rate is 5.2 per cent and is predicted to fall, slowly, to just under 5 per cent over the next two years.

Global financial markets are “signalling a decline in pessimism” said the RBA but retail sales declined in Australia during the three months to September 30 despite tax and rate cuts.

Weighing up all these factors, the RBA board decided to wait for more information before moving rates again. They also issued some guidance for the future. The board said it is “reasononable to expect that an extended period of low interest rates would be required” and that the RBA is still “prepared to ease monetary policy further if needed.”

The information contained on this web site is general in nature and does not take into account your personal situation. Do not interpret the listing order as an endorsement or recommendation from us.  You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.


RBA Australian Interest Rate Update 13 November 2019

The end of rate cuts?

Rate cuts are about to be abandoned by the RBA as a policy tool, in favour of what some economists call ‘printing money,’ according to plenty of speculation this week by leading Australian economists.

“Unconventional Monetary Policy: Some Lessons from Overseas” will be the theme of the next upcoming speech by the governor of the Reserve Bank of Australia, Dr Philip Lowe. The announcement of this speech has led to some to proclaim the end of the rate cutting cycle and the start of printing money.

Traditional, conventional monetary policy is the use of interest rates to influence the supply of money in the economy. Fiscal policies, like tax cuts and budget spending, can also be used by governments to inject money into the economy.

‘Unconventional monetary policy’ is a reference to Quantitative Easing (QE), a policy of providing money in the economy to stimulate demand. Dr Lowe will outline his thoughts on Quantitative Easing, sometimes known as printing money, at an annual dinner of business economists in Sydney in two weeks.

The confirmation of Dr Lowe’s speech on QE has led to widespread speculation that the RBA will stop cutting interest rates and implement QE soon. 0.5 per cent is thought to be the lowest rate setting the RBA is prepared to contemplate with the RBA’s current rate setting just above that at 0.75 per cent.

Australian fiscal and monetary policy makers have never before seen conditions like these. How they respond is a matter of intense speculation and plenty of advice. Commonwealth Bank economist Gareth Aird said quantitative easing is a policy that has significant downsides.

“There are a raft of other policy options available to stimulate aggregate demand, “said Gareth Aird.

“Other options generally fall under the umbrella of “fiscal policy” including tax cuts, more infrastructure spending and more government recurrent expenditure.”

HSBC’s chief economist Paul Bloxham shares that view, that the RBA has taken monetary policy as far as it can go, while fiscal policy has not been fully utilised.

“As we have pointed out repeatedly recently, we think fiscal policy makes more sense than pushing monetary policy to its limits.”

Quantitative Easing is expected to push the value of the Australian dollar down, a development the RBA may welcome to make Australian exports more competitive.

The RBA is due to meet again on the first Tuesday of December to decide on interest rate settings. Futures market trading over the last week indicates very low expectations of an interest rate cut in December. The confirmation of the subject matter of Dr Lowe’s next speech may indicate that the rate cuts are now over.

Meanwhile more lenders have taken variable home loan rates under three per cent per annum for owner -occupiers. The lowest rates now available for retail home loan borrowers are around 2.7 per cent pa.

Twenty lowest (variable comparison rate) home loans listed on InfoChoice for owner occupiers (10/11/19)

Compare home loan rates from Australia’s banks and other lenders at InfoChoice.

The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.

Notes:

Rates are headline rates at the time of publishing, not comparison rates, fees not included.

Rates based on owner-occupier, variable rate, principal and interest 25-year, $300,000 loan amount with a package.

Comparison rate is based on a secured loan of $150,000 over the term of 25 years.

WARNING: These comparison rates apply 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 costs savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan


RBA Australian Interest Rate Update 6 November 2019

“A gentle turning point has been reached” – RBA keeps rates at 0.75%  

Official interest rates in Australia have been kept on hold at 0.75 per cent for November. Yesterday, the governor of the Reserve Bank said positive economic signs are emerging in Australia and globally.

“A gentle turning point appears to have been reached,” said the governor’s statement yesterday.

“The low level of interest rates, recent tax cuts, ongoing spending on infrastructure, the upswing in housing prices in some markets and a brighter outlook for the resources sector should all support growth.”

However, uncertainty caused by weak income growth and consumer spending could weigh down growth, said the governor of the RBA, Dr Philip Lowe.

Dr Lowe said recent rate cuts are working to support economic conditions in Australia.

“Easing of monetary policy since June is supporting employment and income growth.

The governor repeated his advice from October and September that low rates are here to stay for a while yet.

“It’s reasonable to expect that an extended period of low interest rates will be required in Australia to reach full employment and achieve the inflation target.

Dr Lowe said the RBA Board “is prepared to ease monetary policy further if needed.”

Many economists are predicting the RBA will cut rates one more time to 0.50 per cent, in December 2019 or February 2020.

“The outlook for the Australian economy is much the same as we have experienced for the past five years,” economist Callam Pickering from Indeed told The New Daily yesterday, “Below average growth and an elevated unemployment rate.”

“We are not out of the woods yet.”

Unless the federal government delivers stimulus into the economy the RBA will again cut rates closer to zero said Mr Pickering.

BIS Oxford Economics senior economist Sean Langcake said “there will likely be another rate cut in early 2020.”

Banks and other lenders are continuing to announce rate cuts to variable and fixed rate home loan products. There are now 18 variable rate home loan products (OO, P&I) with rates under 3 per cent.

Fixed rates are also continuing to come down. It is now possible for a borrower to lock in sub-3 per cent rates for up to five years.

Low fixed-rate home loan rates now listed on InfoChoice 3/11/19

Lender Fixed Term Rate % pa Comparison rate % pa
UBank 1 year UHomeLoan Fixed (OO, P&I) 2.74 3.33
Well Home Loans 2 year Well Balanced Fixed 2.68 2.84
UBank 3 years UHomeLoan Fixed (OO, P&I) 2.69 3.19
St George / Bank of Melb 4 years Fixed rate Advantage (LVR< 60%, OO, P&I) 2.84 3.63
Citibank 5 years Fixed Rate Loan OOC 2.74 3.26

To fix or not to fix? – that is the question …

With rates so low, the question for many borrowers is: Is it time to fix rates or stay with variable rates?

Should you set and fix your interest rates at the lowest figure the bank is willing to lend, or continue to gamble on variable rates?

With the RBA’s rate set at 0.75 per cent and the likelihood of a further cut next year, variable rates seem like not much of a gamble at all.

You can compare fixed interest rates here and variable rates here.

Demand for fixed rate home loans remains stable and has done so since July. Fixed rate home loans account for 14% of all home loans written throughout the month of September.

“Borrowers can lock in sub-3 per cent rates until 2024,” said Infochoice CEO Vadim Taube.

“Five-year fixed rates with advertised rates under 3 per cent pa are now available.

“And there are 18 variable home loans for owner-occupiers starting with a two and that number will continue to expand.

“If your loan is charging you 3.5 or 4.0 or more per annum, you are not getting anywhere near the lowest rate deal now available,” says Vadim Taube.


RBA Australian Interest Rate Update 29 October 2019

Futures markets do not expect the Reserve Bank of Australia to cut interest rates on Melbourne Cup Day, 5th November 2019.

Keen rate watchers, like senior economist Bill Evans from Westpac, say the RBA has just one more rate cut left, to take the official overnight cash rate to 0.5 %.

After that, say a growing number of experts, rate cuts have no positive effects and plenty of negative unintended consequences. So, 0.5% is thought to be the “zero lower bound” or “effective lower bound” for interest rates.

“Certainly, with the [RBA] board targeting full employment, … and a move into the 2—3 per cent target zone for underlying inflation, it seems certain that the RBA will reach its effective lower bound before it achieves its objectives,” Mr Evans said.

Full employment is generally identified as around 4.5 per cent unemployment for the purposes of the RBA’s policy objectives. Unemployment is now 5.2 per cent and inflation is 1.6 per cent pa.

The RBA could cut rates by 0.25 per cent in December or the next meeting, the first RBA board meeting of 2020, on Tuesday 4th February 2020.

That would take the official Australian rate to 0.5 per cent, the effective lower bound.

After that, policy options like buying government bonds funded by new money or funding banks to lend to business, will be rolled out by the RBA, Bill Evans told The Australian.

The Melbourne Cup RBA board meeting is tradition that sometimes surprises the nation, just before the big race starts, with big announcements about interest rates. In 2008, the RBA cut rates by a massive 0.75 per cent on Melbourne Cup Day, just as the Global Financial Crisis spread around the world.

A year later rates were going up again on Melbourne Cup Day and again in 2010, only to be cut again on Cup Day in 2011.

But the last minutes of the RBA’s October board meeting revealed that the RBA board members are now concerned that rate cuts are not working to stimulate the economy.

The Westpac-MI Consumer Sentiment Index fell 5.5 per cent in October to its lowest level for four years.

Other economists are asking if rate cuts are stimulating the property market, without stimulating the economy.

GDP growth has slumped to 1.4 per cent, well under the government’s and the RBA’s forecasts. Meanwhile property prices in Melbourne and Sydney, in particular, are rallying over the last three months.

The median capital city house price is up 4.8 per cent in three months. Tax cuts and RBA rate cuts have combined to inject confidence into city property markets since June 2019.

There are now 11 variable rate home loan products listed on InfoChoice with advertised rates under 3 per cent pa.

The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.

Notes:

Rates are headline rates at the time of publishing, not comparison rates, fees not included.

Rates based on owner-occupier, variable rate, principal and interest 25-year, $300,000 loan amount with a package.

Comparison rate is based on a secured loan of $150,000 over the term of 25 years.

WARNING: These comparison rates apply 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 costs savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan


Tax cuts leave RBA on verge of unconventional policy
(22 October 2019)

Rate watchers are keenly awaiting the Reserve Bank’s Melbourne Cup Day board meeting in two weeks. The RBA has previously indicated it is prepared to cut rates further to support the economy but markets are betting against a move in November.

Unemployment is down slightly but expected to trend back up and recent tax cuts do not seem to be working. All this has the central bank here in Australia, and other banks around the world talking about the ‘extraordinary’ possibility of setting official rates to less than zero. Or even the experimental new policy lever called quantitative easing, known by some as ‘printing money.’

The Morrison government’s tax cuts have delivered no noticeable extra spending into the economy according to the minutes of the Reserve Bank board’s October meeting.

And three recent rate cuts have also had little or no economic effect.

“Members noted that there had not yet been evidence of a pick-up in household spending following the recent reductions in the cash rate and receipt of the tax offset payments,” read the RBA board minutes released last week.

“Although they acknowledged that it may be too early to expect any signs of pick up,” the board said in its minutes of the meeting.

The RBA is now expected to wait for more economic data before moving interest rates again. The next meeting of the RBA is on Melbourne Cup Day 5th November 2019.

Commonwealth Bank economists using transaction data from customers and Google trends said they had detected a disappointing downturn in consumer spending intentions.

The RBA board said retail sales remained subdued in July and car sales decreased in August.

RBA says rate cuts are working, negative rates unlikely

It is “extraordinarily unlikely” that Australia will adopt negative interest rates said Dr Philip Lowe, Governor of the Reserve Bank of Australia.

Speaking at the International Monetary Fund's (IMF) annual meeting in Washington, Dr Lowe said:

“I am not going to speculate on negative interest rates and quantitative in Australia, other than to say that negative interest rates are extraordinarily unlikely in my country.”

Quantitative easing refers to central bank asset buying from government or lending money to banks to inject money into the economy.

Australia needs negative interest rates of minus 1 per cent for the next few years if the RBA wants to kickstart the Australian economy and meet its inflation target, according to big Wall Street merchant bank and research house Goldman Sachs.

Alternatively, the RBA could stop rate cuts at zero or 0.25 per cent and spend $200 billion in quantitative easing, said Goldman Sachs.

That pessimistic view of the Australian economy is not shared by Dr Lowe who is generally positive. Dr Lowe said rate cuts are working and the mining sector is turning around from a contraction to a growth phase.

“The economy has been through a very soft patch over the past year but is actually gradually improving, lower interest rates are working.”

One piece of good news last week reinforced that positive message. Australia's unemployment rate fell to 5.2 per cent in September, from 5.3 per cent in August according to the Australian Bureau of Statistics.

That is still higher than February’s 4.9 per cent and well outside the RBA’s target for unemployment which is 4.5 per cent.

Job surveys suggest employment growth will slow into 2020 and the unemployment rate may rise.

Many bank economists, including Bill Evans from Westpac, are predicting the next RBA rate cut – to 0.5 per cent – will come in February 2020.

Mr Evans and others have forecast that the RBA will not cut the cash rate lower than 0.5 per cent.

At that very low level, rate cuts lose their effectiveness said Mr Evans and the RBA “may have to consider other policies” like “asset buying or loans to banks.”

The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.

Too low for zero: will interest rates hit 0%? (8 October 2019)

Reserve Bank of Australia (RBA) governor Phillip Lowe is reluctant to cut interest rates further following last Tuesday’s record rate cut.

Yet, with the government unlikely to increase spending, Lowe is in a tricky predicament, with the government placing a budget surplus ahead of jobs and growth.

Despite its reluctance, the RBA has no choice but to stimulate the economy and that could mean zero per cent (or even negative) interest rates on the horizon.

“[We are] prepared to ease monetary policy further if needed to support sustainable growth in the economy, full employment and the achievement of the inflation target over time,” Lowe said.

The top priority of the RBA is achieving a full employment level of 4.5 per cent. It wants businesses to hire staff; to reduce the number of unemployed (currently two million) who are seeking work.

Unemployment currently sits at 5.3 per cent – a 12 month high.

Lowe flagged a 0 per cent interest rate back in August when he told the government, “It’s possible we end up at the zero lower bound although I think it’s unlikely.”

Interest rates have dropped from 1.5 per cent in June 2019 to currently sit at 0.75 per cent. A further cut is expected at either the November meeting or on the first Tuesday in February 2020.

Which banks passed the rate cut on?


Cutting interest rates isn’t necessarily a panacea for the economy. As we have seen this past week, the big four banks are unlikely to pass on rate cuts in full. They certainly won’t be dropping their rates to zero or pay you for having your money with them.

Remember, banks are profit-making machines and have shareholders to satisfy. They want your money, but not at any cost.

The Commonwealth Bank cut its official rate by 0.13 per cent, while NAB and Westpac sliced off 0.15 per cent.

ANZ is lowering rates by between 0.14 percentage points for owner-occupiers paying principal and interest, and 0.25 percentage points for property investors with interest-only loans.

Meanwhile, smaller banks such as U Bank and Athena have passed the cuts on in full. Here’s a comparison of current rates.

However, don’t expect any of these banks to go to zero. It’s too low.

What else can the RBA do?

The RBA could pull a Quantitative Easing policy out of its bag of tricks.

What is QE / Quantitative Easing?

Quantitative Easing (QE) is an unconventional monetary policy. It’s the act of printing money to buy government bonds (debts), which are considered the safest form of investment because governments rarely go bankrupt.

The Australian government currently owes approximately $550 billion to investors who have bought Australian bonds.

QE has been used in the US and parts of Europe in recent years, most notably by Greece, during the global financial crisis (GFC).

It has a short-term impact, but little effect as interest rates head into negative territory. It could also over inflate the price of assets including housing.

The RBA has another option available as well – term funding.

What is term funding?

If the Reserve Bank adopted a term funding policy it would provide funding to banks at close to the official cash rate. This has proven successful in the UK, where they have passed on significant borrowing cost reductions to the real economy.

Both these alternatives are unlikely. Dr Lowe said these measures would only be considered, “If growth is very weak — it stays in the 1 per cent range for a longer period of time — the unemployment rate starts rising, wages growth doesn't pick up and inflation's falling short.”

In short, unconventional monetary policy is unlikely to be implemented.

So there is one more rate cut left int eh RBA’s bag of tricks. After that, it is difficult to determine what will happen.

What we do know is rates will be at their lowest in history (as they are now) and are likely to stay low for some time to come.


The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.

RBA slashes interest rates to new record low (1 October 2019)

Jonathan Jackson
InfoChoice investment expert writer

As expected, the Reserve Bank of Australia (RBA) has cut interest rates from 1 per cent to a record low of 0.75 per cent in October 2019.

RBA meeting minutes suggested the decision to slash the rate further was due to weak domestic growth, increasing downside risks to global growth, stalled wages growth and a rising unemployment rate.

The cut is designed to stimulate Australia’s flagging economy, however there are doubts this move will have any impact. Certainly, there will be no impact at all if the banks don’t pass this cut on to consumers.

Whilst, the Federal Government is urging banks to reduce their rates, there is no guarantee they will, with many economists and financial commentators suggesting many consumers are unlikely to realise the full 0.75 per cent cut.

The big four banks passed on approximately 80 per cent of the previous cut but are expected to hold back more this time.

Which banks are passing on the RBA rate cut?

Nine Network Finance Editor Ross Greenwood postulated that “Banks are not likely to pass it on because their margins are being squeezed. Their margins are being squeezed as interest rates get closer to zero.”

His sage advice to consumers: find another bank if you are unhappy with your rate, or negotiate your current rate down.

InfoChoice CEO Vadim Taube is taking a realistic approach, but agrees margins are being squeezed.

“Some lenders will pass on all of this rate cut and some lenders will retain some or all of it.

“All the banks and other lenders are feeling the pressure of competition and low rates are squeezing their margins right now.

“The next few weeks are going to be great for comparing rates and finding a cheaper loan deal,” said Vadim Taube.

Sydney based online non-bank lender Athena has already passed on the full 0.25 per cent rate cut to owner occupiers and investors.

Athena’s new variable Owner Occupier P&I rate is 2.84 per cent pa (comparison rate 2.80 per cent pa). For investors, Athena’s new rate is 3.24 per cent pa (comparison rate 3.20 per cent pa).

Co-founder and CEO of Athena, Nathan Walsh said: “Saving customers money is at the core of Athena’s mission.

“By passing on all three of the RBA rate cuts immediately, we have been able to save our customers over $23 million over the life of their loans.”

“Customers are realising they don’t need to put up with a home loan provider that doesn’t pass on the savings when they can,” said Nathan Walsh.

Does Australia need more rate cuts?

Future Fund chairman and former Federal Treasurer, Peter Costello believes the economic impact of a rate cut on Australia’s economy will be minimal.

Mr Costello told a Yahoo Finance conference that he feels the current rate drop suggests an economic abnormality, particularly at a time when fundamentals don’t seem so bad: unemployment is 5.3 per cent, inflation is 1.6 per cent, the budget is “more-or-less balanced”, Australia has a trade surplus and a current account surplus.

During his time as Treasurer in the Howard government, these were reasonable statistics.

“If you would have said to me to think of an economy where the cash rate is 1 per cent and the long-term bond rate is 1 per cent, what sort of economy is that?” he said.

“I would say it’s an economy that’s never existed — we’ve never had 10-year money you can get for 1 per cent or less.

“If I had been forced to make a guess, I probably would have said to you that’s got to be a deep recessionary economy.

“Why else would you have interest rates at 1 per cent?”

Mr Costello says structural reform, not monetary policy is what is needed to breathe life into Australia’s economy.

How low can interest rates go?

Further rate cuts are expected.

AMP Capital’s chief economist Shane Oliver said, “We had thought that the low would be 0.5% but given the continuing weak outlook we now see the RBA ultimately cutting the cash rate to a low of 0.25 per cent with another cut around February next year.

“This will likely be the absolute bottom though as banks are unlikely to be able to pass on rate cuts beyond that point and negative rates are likely to be counterproductive.”

CommSec has also tweeted that it expects a further drop: More easing to come? The #RBA has cut interest rates today by 0.25% with expectations of another rate cut in early 2020 #ausbiz #ausecon

The graph below provides an interesting snapshot of how interest rates have declined since 2008 in comparison to the United States Federal Reserve policy:

What to expect?

A further rate cut is predicted, with another before February 2020.

It can’t go much lower than that, so it’s time for home-owners and borrowers to find the best deal for them. A home loan comparison calculator will help.

House prices are once again expected to rise, so now is the right time to compare rates.

Keep up to date with all the latest rate changes from lenders at InfoChoice Trending News.

The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.

Donald Trump’s rate cuts coming to Aussie households in October (25 Sept. 2019)

Jason Bryce
InfoChoice Journalist & Content Manager

Donald Trump has been demanding rate cuts for months and he got one last week. And that US rate cut looks certain to flow through to Australian homebuyers, as soon as next Tuesday the 1st of October.

The monetary policy makers at the Reserve Bank of Australia have confirmed that they are monitoring rates in the USA and elsewhere and are likely to follow with Australian rate cuts that will flow through to homebuyers.

The President of the USA, Donald Trump unleashed a Twitter tirade starting in April and lasting months against the “boneheads” running the US Federal Reserve (America’s central bank) for not cutting interest rates sooner and further.

Mr Trump has consistently criticised the Federal Reserve chairman Jerome Powell as “clueless” for keeping US interest rates slightly higher than global trading partners.

“The Federal Reserve should get our interest rates down to ZERO, or less,” the president tweeted last week.

Jerome Powell’s federal reserve, like Australia’s RBA, is supposed to be independent of government interference and not subject to instructions from political leaders. The Federal reserve is required by government mandate to set monetary policy that will “foster maximum employment and price stability.” 

Nevertheless, the President has been piling on the pressure for lower rates.

“The USA should always be paying the the [sic] lowest rate,” the President tweeted.

“No Inflation! It is only the naïveté of Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing,” Mr Trump continued in a long evening Twitter thread.

“A once in a lifetime opportunity that we are missing because of “Boneheads.”

Last week the US Federal Reserve delivered a 0.25 per cent rate cut to the Pesident and the US economy. The Federal Reserve target interest rate is now 1.75 – 2.0 per cent, still higher than in many other countries.

Last night in Armidale NSW, The Reserve Bank of Australia’s governor Dr Philip Lowe noted the US rate cut and raised expectations of an Aussie rate cut for next week.

“Almost all major central banks are expected to ease monetary policy over the year ahead,’ said Dr Lowe.

“The United States Federal Reserve and the European Central Bank having already moved in this direction.”

“Given that inflation is low – and forecast to remain low – investors are also expecting central banks to maintain very accommodative settings of monetary policy for years to come.

The Reserve Bank board “is prepared to ease monetary policy further if needed to support sustainable growth in the economy,” said Dr Lowe.

The official unemployment rate in Australia rose in August to 5.3 per cent, from 5.2 per cent in July according to data released last week from the Australian Bureau of Statistics. In the 12 months to June 2019, Australia’s GDP grew by 1.4 per cent, much slower than expected.

“We did not expect this slowdown, so it has come as a bit of a surprise,” said Dr Lowe

Slowly but surely, property prices head north (17 Sept. 2019)

Jonathan Jackson
InfoChoice investment expert writer

It has been the longest property downturn in decades, but sentiment in the property market looks to be improving.

That is certainly true of the Melbourne and Sydney markets. In July, house values in Sydney rose 0.2 per cent, whilst Melbourne grew by 0.1 per cent. Values of apartments in the two cities increased by 0.3 per cent and 0.4 per cent respectively.

The Council of Financial Regulators noted the turnaround when they last met for their quarterly pow-wow.

The Council discussed signs of stabilisation in the Sydney and Melbourne housing markets, evident in both housing prices and auction clearance rates.

However, they did note conditions in most other capital cities continue to be soft.

According to Domain, that trend will reverse.

The following table suggests modest growth in all capital cities in house price forecasts:

Factors driving the turnaround are the current strength of the labour market, low interest rates and the improvement in lending standards (as well as a slight softening of borrowing criteria).

This is no dead cat bounce

There are rumblings the current change in sentiment to one of cautious optimism is just temporary. There’s further prolonged pain on the horizon.

That false optimism is known as a dead cat bounce: a small, short-lived recovery in the price of a security or asset, before a continued downtrend kicks in.

There will always be doomsayers predicting the end of days for the property market, but really all signs point to the contrary.

The recovery looks legitimate.

A stable government and significant drops in interest rates are further influential reasons for slowly bringing people back to the market.

According to the latest data from the Australian Bureau of Statistics (ABS), the value of new loans issued to households jumped 3.9 per cent to $32 billion in July. This was its sharpest increase in four-and-a-half years.

The ABS states the amount of money borrowed rose 5.3 per cent to $13.3 billion, from the previous month. Seasonally adjusted that is the strongest result since August 2015.

Other noteworthy statistics include the 4.2 per cent increase (32,427 in July) in the number of people taking out a mortgage to buy their next home. Market expectations were set at a 1.5 per cent increase – that’s a significant 2.7 per cent increase on what was expected.

Even first home buyers are re-entering the property market. ABS statistics show the number of loans to owner occupier first home buyers rose for the fourth consecutive month in July (up 1.3 per cent).

ABS Chief Economist, Bruce Hockman said: “In July, growth in new lending commitments to households was the strongest since October 2014.

“For the second month in a row there were particularly strong increases in the level of new lending commitments for owner occupier and investment dwellings. Despite this recent turn-around both series remain down from their respective peaks in 2017.”

Sentiment is once again north facing and it as if slowly, but surely the downturn is fading. It’s a good time to start comparing interest rates and benefits, whilst working out your borrowing power.

And let’s spare a thought for those who lost a little bit of value over the past few years. It’s not all bad. When you put this last downturn in perspective, house values are close to 50 per cent higher than at the start of the decade. That’s a solid return.

Compare the top home loan products from Australia’s banks, credit unions, building societies and non-bank lenders here.

The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.

Consumer confidence down but house prices up (11 September 2019)

By Jonathan Jackson
InfoChoice investment expert writer

House price and auction clearance rate data from July indicate a housing market revival is happening. However some economists are warning this could be a temporary recovery before the next substantial fall.

Usually, a recovery in the housing market indicates a rise in consumer confidence. However, today’s data from the Westpac-Melbourne Institute Index of Consumer Sentiment runs contrary to that theory.


source: tradingeconomics.com

Consumer confidence is down 1.7 per cent to 98.2 in September 2019, swinging from a 3.6 per cent rise in August. The decline is due to pressure on family finances and concerns about the near-term outlook for the global economy. 

What is interesting is that the stimulants used by the Reserve Bank of Australia (RBA) and the Federal Government to invite spending, seem to be having little or no impact.

With regard to the tax offset payments introduced by the government on 1 July, just over 16 per cent of consumers reported receiving a refund with just 29 per cent of those people planning to spend all of that money.

15 per cent of surveyed consumers planned to spend half the refund and a substantial 53 per cent, will put the extra cash towards savings.

The government was hoping that consumers would go forth and spend the extra cash but 61 per cent of Aussies surveyed by Westpac said the wisest place to put their savings was in deposits, superannuation or paying down debt.

“Many Aussies are confused about what to do with their money in the current environment,” CommSec chief economist Craig James said.

Employment is also a concern.

“These concerns about the state of the economy; the international backdrop; and employment are seeing consumers become more cautious about their finances,” the Westpac report states.

The unemployment rate is steady at 5.2 per cent, unchanged since July, and still higher than the RBA would like but employment is up.

But despite all these headwinds, confidence is returning to the housing market.

“Consumers’ house price expectations have continued to firm,” says the Westpac-Melbourne Institute Index of House Price Expectations Index.

The index posted a further 3.9 per cent rise in September to be up a spectacular 45.8 per cent since May. All major states recorded a lift in price expectations this month. Expectations posted a particularly strong 6.7 per cent gain in NSW.”

For homeowners and investors, that’s great news, especially when you consider that further stimulatory measures may be taken by the RBA when it meets on 1 October.

Westpac chief economist Bill Evans expects the Reserve Bank of Australia to cut rates next month by another quarter-point to 0.75 per cent.

There are pros and cons to that, but with interest rates so low, now may be the best time in a while to consider a home purchase, so start comparing home loans.

Is it too soon in the recovery to say Hallelujah to that?

Low rates locked in to support ailing Aussie economy (4 September 2019)

The Australian economy grew by 0.5 per cent in the June quarter and 1.4 per cent in the 2018/19 financial year, the lowest level of growth since the global financial crisis in 2008/2009.


source: tradingeconomics.com

The final outcome for GDP in 2018/19 was substantially under expectations. The federal government had predicted growth of 2.25 per cent for the year and based the federal budget around this number. The Reserve Bank of Australia expected growth of 1.8 per cent.

Investment in housing fell 4.4 per cent during the last three months with household expenditure ‘subdued’ according to the ABS.

Economic growth in Australia is being driven by mineral exports while the domestic economy is being supported by government spending, particularly investment in disability, aged and health care.

“Strength in mining related activity was seen across a number of measures,” said Bruce Hockman, chief economist for the Australian Bureau of Statistics.

“Growth in the domestic economy remains steady.”

Meanwhile other ABS data released this week showed that retail sales shrank in July.

The Reserve Bank of Australia board has left official rates unchanged at 1.00 per cent in September. The RBA board said “an extended period of low interest rates will be required” to reduce unemployment.

The RBA will “ease monetary policy further if needed to support sustainable growth in the economy.”

ASX 30-day Interbank Cash rate futures market trading indicates a 60 per cent chance of a rate cut by the RBA in October. The market currently expects the central bank to slice the official interest in Australia by 0.25 percentage points to 0.75 per cent at the next RBA board meeting on Tuesday 1 October.

rba chance of rate cut to 0.75% in October

RBA board minutes from the September meeting indicate low rates are here to stay for some time yet.

“It is reasonable to expect that an extended period of low interest rates will be required in Australia to make progress in reducing unemployment,” read the September board minutes.

“The Board will continue to monitor developments, including in the labour market, and ease monetary policy further if needed to support sustainable growth.”

Are interest rates going up or down? (22 August 2019)

While many economists are telling Aussies to expect more rate cuts, they may not arrive immediately.

Futures markets have priced in an 89 per cent expectation that the Reserve Bank will leave interest rates unchanged in September, up from around 50 per cent early last week.

The governor of the RBA, Dr Philip Lowe has signalled he is worried about a developing trade dispute between China and the USA. He described bullish trade war talk as “very worrying.”

“I do not have a clear idea of what strategy the US has,” said Dr Lowe.

And Chinese manufacturing is suffering, which could flow through to Australian mineral exports and jobs.

“No country has made itself wealthy and prosperous through protectionism,” said Philip Lowe. The US President Donald Trump jacked up the trade war rhetoric yesterday describing himself as “the chosen one” to take on China.

Read more about Donald Trump’s trade war and the impact it could have on your home loan at InfoChoice.

RBA says low rates are here to stay (6th August 2019)

The Reserve Bank board has left the official cash interest rate unchanged for August at 1.0 per cent.

A statement from the board noted increasing uncertainty in the global economy caused by trade and technology disputes as well as lower than expected economic growth in Australia in the first half of 2019.

The budgets of Aussie households are “weighed down” by low income growth and declining housing prices said the board.

Unemployment is up slightly to 5.2 per cent and inflation edged higher to 1.6 per cent.

Australians should expect a long period of low interest rates. The RBA board said:

“It is reasonable to expect that an extended period of low interest rates will be required in Australia to … reduce unemployment and [make] progress towards the inflation target.”

The Australian National University’s ‘RBA Shadow Board’ of nine respected economists has predicted a 33 per cent probability of more rate cuts and 38 per cent probability of rate increases over the remainder of 2019.

Australia's Current Interest Rate is 1.00%

The board of Australia’s government-owned central bank, the Reserve Bank of Australia (RBA) sets the Australian official cash interest rate (OCR) on the first Tuesday of each month, except January. 

InfoChoice tracks the RBA’s rate changes, reports changes within minutes of the RBA making an announcement and gives you the information you need to find the best mortgage and savings rates in Australia for your own circumstances.

The RBA cut interest rates on 2 July by 0.25 percentage points to 1.00 per cent. This follows a 0.25 percentage point cut in June.

Rising unemployment was cited in a statement from the RBA issued today as a key reason for this rate cut.

“There has … been little inroad into the spare capacity in the labour market recently, with the unemployment rate having risen slightly to 5.2 per cent,” said the RBA statement.

Over the last 12 months (to 31 March 2019), the RBA said the “Australian economy grew at … below-trend 1.8 per cent.”

“Consumption growth has been subdued, weighed down by a protracted period of low income growth and declining housing prices.”

What is the RBA’s official cash interest rate?

The OCR effectively sets the wholesale price of lending in Australia. When the RBA changes this rate, the banks and other lenders follow by changing their retail variable lending and savings interest rates. If the RBA puts the OCR up, your variable home loan and savings accounts rates will probably also rise. A cut in the OCR means your loan and account rates may also be cut.

The lowest variable rate home loans available in Australia are priced about two per cent above the RBA’s OCR. The lowest variable rate mortgages on offer from the big four banks start from about three per cent above the OCR.

The highest savings account rates in Australia are about one per cent over the OCR. 

Fixed rate home loan rates and term deposit rates are not based on the RBA’s OCR and do not follow movements in the official cash rate. 

The RBA operates independently of government and is charged with maintaining low unemployment and low inflation. When inflation falls or unemployment rises, the RBA may consider cutting rates. When unemployment falls, or inflation rises sharply, the RBA may consider raising rates.

Last Meeting: Tuesday 3 March 2020

Next RBA Meeting: Tuesday 7 April 2020

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