The RBA has revealed its cash rate call for the month, here's what it means for you and your mortgage.
The central bank today left rates on hold at one per cent, after two consecutive drops in the previous months.
Today’s cash rate call didn’t come as a surprise to the nation’s leading economists, including Shane Oliver of AMP Capital.
He told Smart Property Investment last week that the next cash rate move would be a cut, and it would likely be in November this year. He also foresees a cut in early 2020.
The recent cuts from the Reserve Bank prompted a spate of lenders to drop their interest rates on mortgage products. The decision to hold the cash rate today has borrowers asking: will my rates drop any further?
The answer is: it’s likely, but will not be necessarily in line with another cash rate cut.
Other factors have recently influenced Australia’s lenders to adjust the terms of their mortgage products. For example, the banking regulator recently eased its serviceability guidance for lenders, which banks and non-banks alike passed on in their conditions.
There are still some lenders yet to pass on the new guidance, but they are expected to. You can see which lenders have made adjustments in the last month here.
Further, the banks may be seeking further demand for their fixed-term mortgage products. At this stage, three of the major banks - ANZ, CBA and Westpac - have slashed their fixed rate loans by up to 96 basis points. However, as Jacqueline Dearle from Mortgage Choice points out, demand is yet to fully pick up in the market.
“We’ve seen a lot of very low fixed-rate offers hitting the market of late, some as low as 2.79 per cent,” she added.
“Fixed rates may be well worth considering – as we’ve never seen rates this low,” she said.
“Think of this as the best of both worlds: if rates drop you get some of the benefits and if they increase you only get part of the pain,” she said.
“Even if you’ve been on a variable loan for five years, it’s not too early to refinance with rates at a record low,” she concluded.