Is the RBA going to cut the cash rate again today?

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on April 07, 2020
Is the RBA going to cut the cash rate again today?

Photo by Anggun Tan on Unsplash

Less than three weeks after its emergency rate cut in March, Australia's central bank meets again today to discuss further cuts.

The Reserve Bank of Australia (RBA) met for a second time in a month for the first time since 1997, cutting the cash rate twice in a month for the first time ever to a new record low of 0.25%. 

It also commenced a first-ever quantitative easing (QE) program, designed to help fund the Government's $200 billion-plus stimulus packages, as well as encourage banks to lend to potential borrowers. 

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers. 

Lender

Variable
More details
UNLIMITED REDRAWSSPECIAL OFFER
  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
UNLIMITED REDRAWSSPECIAL OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
Variable
More details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
Variable
More details
ZERO APPLICATION FEESFEE FREE OFFSET
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
ZERO APPLICATION FEESFEE FREE OFFSET

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
Variable
More details
AN EASY DIGITAL APPLICATION
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
AN EASY DIGITAL APPLICATION

Neat Variable Home Loan (Principal and Interest) (LVR < 60%)

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
Variable
More details
NO APPLICATION FEES
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
NO APPLICATION FEES

Yard Home Loan (Principal and Interest) (Special) (LVR < 80%)

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
Variable
More details
NO UPFRONT OR ONGOING FEES
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
NO UPFRONT OR ONGOING FEES

Owner Occupier Accelerates - Evaporate (LVR 60%-70%) (Principal and Interest)

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
Variable
More details
NO UPFRONT OR ONGOING FEES
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
NO UPFRONT OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 80%)

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
Variable
More details
UNLIMITED EXTRA REPAYMENTS
UNLIMITED EXTRA REPAYMENTS

Basic Home Loan (Principal and Interest) (LVR < 60%)

    Variable
    More details
    EASY DIGITAL APPLICATION
    EASY DIGITAL APPLICATION

    Neat Variable Home Loan (Principal and Interest) (LVR 70%-80%)

      Variable
      More details
      $0 APPLICATION FEE
      $0 APPLICATION FEE

      Budget Home Loan (Principal and Interest) (LVR < 80%)

        Variable
        More details
        100% FULL OFFSET ACCOUNT
        100% FULL OFFSET ACCOUNT

        Offset Package Home Loan (Principal and Interest) (LVR < 60%)

          Variable
          More details
          LIMITED TIME OFFER
          • Fast turnaround times, can meet 30-day settlement
          • No ongoing or monthly fees, add offset for 0.10%
          • Extra repayments + redraw services
          LIMITED TIME OFFER

          Smart Booster Home Loan Discounted Variable - 1yr

          • Fast turnaround times, can meet 30-day settlement
          • No ongoing or monthly fees, add offset for 0.10%
          • Extra repayments + redraw services

          Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of May 24, 2022. View disclaimer.

          So will the RBA cut again today? Check out their decision here.

          The short answer is: It's unlikely, but given the unprecedented times we're currently experiencing, nothing is impossible. 

          In the minutes of its emergency March meeting, the RBA said the cash rate had reached its floor and ruled out negative interest rates in Australia.

          "Members also agreed that the cash rate was now at its effective lower bound," it said.

          "Members had no appetite for negative interest rates in Australia." 

          Furthermore, the central bank said the cash rate would not be increased until progress towards full employment (4.5%) was made and inflation sat between 2-3%. 

          Given unemployment is tipped to hit 10%, and the Government's 'hibernation' of the economy for six months, it's likely the cash rate won't be moved for a long time. 

          NAB economist Rodrigo Catril said the RBA would hold steady today after a tumultuous previous month.

          "After all the fireworks last month we don’t expect any surprises from the RBA today," Mr Catril said.

          "The RBA is broadly expected to keep policy – the cash rate, yield curve control and QE – unchanged."

          Westpac economists also said the RBA's emergency March minutes meant the cash rate would remain as is today. 

          "As such, the focus of RBA meetings will be on how the board assesses its QE measures and whether they may require adjusting," they said. 

          "For April we do not anticipate this requiring any adjustments."

          Meanwhile, Bloomberg's monthly survey of top economists returned a unanimous 0.25% cash rate hold result. 

          The RBA's cash rate decision will be announced at 1430 AEST.

          What is the RBA doing if it's not cutting the cash rate? 

          You may be surprised to find out that for much of the past two weeks, the Australia's interbank overnight cash rate has actually been below the RBA's official cash rate target of 0.25%, even falling to as low as 0.10%.

          As of 6 April, the interbank overnight cash rate was 0.18%.

          That's because of the RBA's QE's measures which are designed to have the same effect as a rate cut without actually cutting the cash rate. 

          The RBA has so far purchased $29 billion of government and secondary market bonds, purchasing billions more each day. 

          The government bond purchase is designed to help fund the three stimulus measures, which have boosted Newstart payments, and subsided wages for those out of work via the 'Jobkeeper' scheme

          The secondary market purchase is designed to flood the financial market with more money so lenders are encouraged to lend money, rather than sit on their hands.

          These two measures push down Australia's cash rate, as the RBA is easing monetary policy by injecting huge quantities of cash into the economy.

          In addition to this, the RBA has set up a $90 billion lending facility to banks for small and medium businesses, in partnership with the government, who contributed $15 billion.

          Lenders can borrow from this fund at an extremely low rate and then lend this to businesses, in an effort to keep them afloat through the COVID-19 shutdowns. 


          Disclaimers

          The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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          author-avatar
          Alex joined Savings.com.au as a finance journalist in 2019. He enjoys covering in-depth economical releases and breaking down how they might affect the everyday punter. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

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