RBA holds cash rate steady at 0.10% in April

author-avatar By on April 06, 2021
RBA holds cash rate steady at 0.10% in April

At its post-Easter meeting today the Reserve Bank held the cash rate steady at 0.10%.

This marks the fourth consecutive meeting the RBA has decided to hold the rate at 0.10%, after making a 'Melbourne Cup cut' in November last year.

RBA Governor Dr Philip Lowe said while there are improvements in the economy, certain key indicators lag behind.

"The rollout of vaccines is supporting the recovery of the global economy, although the recovery is uneven. While there are still considerable uncertainties regarding the outlook, the central case has improved," he said.

"Inflation remains low and below central bank targets.... wage and price pressures are subdued and are expected to remain so for some years. The economy is operating with considerable spare capacity and unemployment is still too high.

"It will take some time to reduce this spare capacity and for the labour market to be tight enough to generate wage increases that are consistent with achieving the inflation target."

Dr Lowe maintains that wage growth and inflation consistently in the 2-3% range are necessary before the cash rate rises; the RBA Board does not expect these conditions to be met until 2024 "at the earliest".

The Governor also said that "the Bank will be monitoring trends in housing borrowing carefully and it is important lending standards are maintained".

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.

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%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.

Westpac's head of rate strategy Damien McColough said it was more of the same from the RBA.

"There are ongoing signs that the market has re-calibrated its inflation expectations sufficiently for now and so other more supportive influences, such as the ongoing QE [quantitative easing] program can gain more traction," he said.

Mortgage Choice CEO Susan Mitchell said the hold was "unsurprising", but that lenders are also starting to move independently of Reserve Bank movements.

"Interest rates remain at record lows, both for variable rate and fixed interest rates, however we are starting to see some lenders raise interest rates particularly on 4-year and 5-year fixed home loans," she said.

"With the RBA’s term funding facility set to end in June, further upward pressure on fixed interest rates may continue later this year."


Photo by Pat Whelen on Unsplash

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

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.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*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.

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author-avatar
Harrison joined Savings in 2020. He is an experienced journalist, with previous stints at News Corp and financial comparison site Canstar. With a keen interest in personal finance, Harrison is passionate about helping consumers make more informed financial decisions.

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