RBA rates on hold: How long they will be this low
Home loan customers should expect to see rock-bottom interest rates at least until the end of 2021.
The Reserve Bank of Australia board met today and has kept the cash rate on hold at 0.25 per, a good result for borrowers but not such great news for savers relying on cash deposit rates.
HSBC's chief economist Paul Bloxham said home loan customers should continue to see "low, low, low" rates for at least the next 18 months.
"We think the cash rate will be kept at 0.25 per cent at least out until the end of 2021 and that's as far out as we forecast," he said.
"That is underpinning record-low interest rates and that is what households should expect will continue for quite some time."
In the past 12 months there has been five cash rate cuts including three this year.
Some owner occupier variable and fixed rate deals are down in the low two per cent range and borrowers are being encouraged to hunt for competitive offers to save themselves some serious cash.
Home Loan Experts' managing director Otto Dargan said the RBA will keep rates low for the "foreseeable future".
"The economy needs a boost yet cutting rates further wouldn't be effective," he said.
"Fixed rates are well below variable home loan rates and normally this would indicate that rates will fall further.
"In this case it's due to cheap government funding to the banks so this is a great opportunity for borrowers to lock in rates as low as 2.09 per cent, the lowest in Australia's history."
Latest data from financial comparison website Mozo showed the cheapest owner occupier principal and interest three-year fixed rates are at just 2.09 per cent.
For variable rate deals the cheapest offers sit at just 2.39 per cent.
Mozo spokeswoman Kirsty Lamont said, "home loan interest rates are likely to remain at all time lows for some time".
"With COVID-19 wreaking havoc on the economy, a low cash rate is critical in helping to restart the economy," she said.
"It's important not to become complacent and automatically assume your lender will put you on the best rate.
"With variable rates as low as 2.39 per cent and fixed rates even lower, there are significant savings on offer if you want to compare and switch lenders."
BEST OWNER OCCUPIER DEALS
VARIABLE HOME LOAN RATES
1. Reduce Home Loans, Rate Slasher, 2.39 per cent, monthly repayments $1168.
2. Homestar, Star Essentials, 2.44 per cent, $1176.
3. Well Home Loans, Well Balanced, 2.47 per cent, $1181.
4. Freedomelend, Variable Home Loan, 2.49 per cent, $1184.
5. Pacific Mortgage Group, Standard Variable, 2.49 per cent, $1184.
* Source, Mozo.com.au, based on $300,000 30-year owner occupier principal and interest rate deal.
THREE - YEAR FIXED RATES
1. Reduce Home Loans, Home Owners Dream Fixed, 2.09 per cent, $1122.
2. Well Home Loans, Well Balanced Fund, 2.09 per cent, $1122.
3. Teachers Mutual Bank, Fixed Option Home Loan, 2.14 per cent, $1130.
4. ING, Fixed Rate Loan (Orange Advantage), 2.14 per cent, $1130.
5. Pacific Mortgage Group, Fixed Home Loan, 2.15 per cent, $1131.
* Source: Mozo.com.au, based on $300,000 30-year owner occupier principal and interest rate deal.
Originally published as RBA rates on hold: How long they will be this low