RBA cuts cash rate to 0.10% for November

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on November 03, 2020
RBA cuts cash rate to 0.10% for November

Source: RBA

The central bank has cut Australia's cash rate from 0.25% to a new record low of 0.10%.

The decision from the Reserve Bank (RBA) to cut the rate by 15 basis points was almost universally expected by economists, with the market pricing in an 84% chance of a cut. 

Recent comments from RBA Governor Phillip Lowe set the scene for a cut, after he suggested one would be more effective now as the economy was opening up, instead of at the height of the pandemic when restrictions were in place. 

It's the first time the RBA has cut the rate since March, where it made two cuts in the month and implemented its quantitative easing (QE) program, both historic firsts. 

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
Advertised rate Comparison rate* Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval

VariableMore details
LIMITED TIME 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%
LIMITED TIME 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%
VariableMore details
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
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
FixedMore details
USE A MARKET LEADING APP TO HELP YOU PAY OFF YOUR LOAN SOONER

Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

  • Make up to $20,000 additional repayments per fixed term
  • Redraw available – lets you access any extra loan repayments you’ve made
  • Choose to rate lock for 90 days (fee applies)
USE A MARKET LEADING APP TO HELP YOU PAY OFF YOUR LOAN SOONER

Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

  • Make up to $20,000 additional repayments per fixed term
  • Redraw available – lets you access any extra loan repayments you’ve made
  • Choose to rate lock for 90 days (fee applies)
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Variable Owner Occupied, Principal and Interest (Refinance Only)(LVR <75%)

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.
REFINANCE IN MINUTES, NOT WEEKS

Variable Owner Occupied, Principal and Interest (Refinance Only)(LVR <75%)

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.

Rates correct as of January 28, 2022. View disclaimer.

Melbourne Cup Day is somewhat of a cash rate change tradition for the central bank, as it gives time for savings to flow through to households and retailers before Christmas. 

The RBA also announced a reduction in the interest rate on new drawings under the Term Funding Facility to 0.1%, as well as the purchase of $100 billion of government bonds. 

The central bank said the Board was committed to supporting the recovery of the Australian economy from the pandemic. 

"With Australia facing a period of high unemployment, the Reserve Bank is committed to doing what it can to support the creation of jobs," it said.

"Encouragingly, the recent economic data have been a bit better than expected and the near-term outlook is better than it was three months ago.

"Even so, the recovery is still expected to be bumpy and drawn out and the outlook remains dependent on successful containment of the virus." 

The RBA said it has put the high rate of unemployment as an important national priority. 

"Today's policy package, together with the earlier measures by the RBA, will help in this effort.

"The RBA's response is complementary to the significant steps taken by the Australian Government, including in the recent budget, to support jobs and economic growth."

"Borrowing has never been cheaper" 

Mortgage Choice CEO Susan Mitchell said today's decision would come as welcome news to families across the country in the lead up to Christmas, but wasn't sure lenders would pass on the cut. 

“Regardless of how much variable rates drop in response to the latest cash rate cut, the reality is that borrowing money has never been cheaper - the home loan market is extremely competitive right now and we’re seeing some fixed rate loans that are cheaper than variable rates," Ms Mitchell said.

"Mortgage Choice home loan approval data shows that the trend towards fixed rates remains strong, with 32% of borrowers choosing to lock in part or all of their rate in October.”

Ms Mitchell said regardless of if lenders passed on the cut, she advised people to ensure you're taking advantage of the competitive market. 

"If you’re on a variable interest rate, check to see what rate you’re paying and ask your mortgage broker or lender if they can get you a better deal," she said.

"If your interest rate has dropped and you’re in a position to pay beyond the minimum repayment, I encourage you to keep your repayments at the same level to pay your loan down faster.”

Tim Lawless, Head of research at CoreLogic, said it was highly likely lenders would pass on the cuts. 

"If passed on by the banks, which is highly likely, we will see mortgage rates fall further from their already record lows," Mr Lawless said.

"Historically cuts to interest rates have fuelled housing market activity and generally aligned with upwards pressure on dwelling prices.

"With the trend in housing values already rising around most areas of the country, there is a good chance lower rates could see momentum building across the nation’s most valuable asset class."


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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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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