RBA holds the cash rate at 0.25% for July

author-avatar By on July 07, 2020
RBA holds the cash rate at 0.25% for July

Photo by Mateusz Glogowski on Unsplash

Australia's central bank has held the cash rate at 0.25% for July.

The announcement comes as little surprise, with recent comments from the Reserve Bank of Australia (RBA) suggesting it would be some time before the rate was changed.

The central bank has indicated it has no appetite for negative interest rates and there would be no hike in the rate until progress towards full employment was made. 

July marks the third consecutive month the RBA has left the rate unchanged after a tumultuous March saw two cuts, as well as the implementation of a quantitative easing (QE) program.

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
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
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
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
VariableMore details
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

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

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

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

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
VariableMore details
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^

Rates correct as of October 19, 2021. View disclaimer.

RBA Governor Phillip Lowe said the Australian economy was experiencing its worst contraction since the Great Depression but there were signs of improvement. 

"Conditions have, however, stabilised recently and the downturn has been less severe than earlier expected," Dr Lowe said.

"While total hours worked in Australia continued to decline in May, the decline was considerably smaller than in April and less than previously thought likely.

"There has also been a pick-up in retail spending in response to the decline in infections and the easing of restrictions in most of the country."

Despite this, Dr Lowe said fiscal and monetary support would be required for some time, as a return to normality was some way off. 

"Notwithstanding the signs of a gradual improvement, the nature and speed of the economic recovery remains highly uncertain," he said.

"Uncertainty about the health situation and the future strength of the economy is making many households and businesses cautious, and this is affecting consumption and investment plans.

"The pandemic is also prompting many firms to reconsider their business models. As some businesses rehire workers as demand returns, others are restructuring their operations." 

No surprises from the RBA 

Mortgage Choice Chief Executive Officer Susan Mitchell said the RBA's decision came as little surprise, with the low cash rate supporting a low cost of borrowing, which in turn supported activity in the home loan market. 

"Lenders have been pulling out all stops to compete for market share and over the last few months, we have seen cashback offers and interest rates lowered across both variable and fixed-rate home loan products, Ms Mitchell said.

"This fierce competition has encouraged a vast number of borrowers to switch their home loan providers and refinance their loans."

Ms Mitchell said the economic climate and abundance of extremely low rates had a huge number of borrowers fixing their home loan.

"Mortgage Choice data shows that 33% of borrowers opted to fix either part or all of their home loan interest rate in the month of June, up from the three month average of 14% to February 2020." 

September remains a concern

CreditorWatch chief executive Patrick Coghlan said despite the gradual improvement in economic conditions, the Government and the RBA needed to support the small and medium-sized business sector. 

"While positive sentiment has increased in recent weeks as the economy and trade starts to open up, the big concern is what happens in and around September when the stimulus packages potentially come to an end – namely, Jobkeeper, Jobseeker, rental abatement, a home loan repayment reprieve, insolvency/bankruptcy legislation and safe harbour changes, Mr Coghlan said.

"There’ll be a serious shock to the economy as people are once again forced to start paying the bills and/or stop receiving government incentives."

He said business owners would need to start looking at whether they can survive and company directors needed to act diligently to not rack up debt they couldn't repay. 

"Currently, there are plenty of businesses out there that should be initiating wind up or at least engaging with a restructuring specialist or banker," he said.

Ms Mitchell meanwhile said all eyes would be on the government to see if they would extend JobKeeper and JobSeeker past their September end date. 

“Unless we see a dramatic change in economic indicators, we can expect to see the Reserve Bank’s policy setting to remain in place for a long time," she said. 


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): Great Southern Bank, 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.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

Latest Articles

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.

Collections:

Be Savings smart.
Subscribe for free money newsletters.

By subscribing you agree to the Savings Privacy Policy