RBA keeps interest rates unchanged at December meeting

The Reserve Bank kept interest rates unchanged at its December meeting.

The Reserve Bank has opted to keep official interest rates unchanged at its latest policy meeting this afternoon. The cash rate currently sits at a record low 0.1%, where it has remained since early November.

"In Australia, the economic recovery is under way and recent data have generally been better than expected. This is good news, but the recovery is still expected to be uneven and drawn out and it remains dependent on significant policy support," said RBA Governor Philip Lowe in his post-meeting statement.

"In the RBA's central scenario, it will not be until the end of 2021 that the level of GDP reaches the level attained at the end of 2019. In the central scenario, GDP is expected to grow by around 5 per cent next year and 4 per cent over 2022."

The central bank announced a number of changes to key policy rates last month, including a 15 basis point reduction to the cash rate, three-year bond yield target, and term funding facility rate.

It also launched a quantitative easing program aimed at purchasing $100 billion worth of bonds with maturities of around five to ten years over a period of six months.

So far, the RBA has bought $19 billion worth of government bonds and a further $5 billion of Australian government securities in support of the 3-year yield target. Its balance sheet has increased by around $130 billion this year.

Lowe said the November package had already delivered substantial aid to the economy, and is helping to lower financing costs for borrowers and keep the exchange rate low. 

He also cautioned the government against withdrawing its fiscal stimulus, saying that while the economic outlook has picked up on news of a coronavirus vaccine, ongoing support will be necessary until it is widely available.

Where do home loan rates currently sit?

In response to last month’s decision, 33 of the 96 lenders in our database passed on some or all of the cut to their variable rate customers, but overall the picture has been dominated by cuts to fixed rates.

Rates below the 2.00% mark are no longer a rarity, and the RBA’s bond purchasing activities have helped push 4 and 5-year terms to the lowest they’ve ever been. Right now, the average 2-year rate in the Mozo database (OO, P&I) is 2.35% p.a., while the average 5-year rate sits at 2.68% p.a.

If the Australian dollar continues to appreciate, we could see an expansion of the quantitative easing program in the first quarter of 2021. If this happens, we could see fixed rates drop even further.

Though less common, cuts to variable rates continue to flow through. At the time of writing, the average variable rate (OO, P&I) sits at 3.31% p.a. Among lenders we track, the lowest rates are currently offered by Reduce Home Loans at 1.99% p.a. (2.05% p.a. comparison rate*). 

For more information about mortgage and lending trends, visit our home loan statistics page. And if you want an idea of what loans are currently out there, browse our home loan comparison page, where you can filter your search by rate and type.

Read last month's Reserve Bank interest rates update.

Home loan comparisons on Mozo - last updated 28 March 2024

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure
  • Offset Home Loan

    Package, Owner Occupier, LVR<60%, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    6.15% p.a. variable
    6.40% p.a.

    Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.

    Compare
    Details
  • Mozo Expert Choice Badge
    Express Home Loan

    Owner Occupier, Principal & Interest, LVR <90%

    interest rate
    comparison rate
    Initial monthly repayment
    6.01% p.a. variable
    6.14% p.a.

    Get fast online approval from the award-winning Bendigo Bank Express Home Loan. Multiple offset accounts and redraw available. 100% offset on variable rate loans and partial offset on fixed rate. Flexible repayment options. New home loans only.

    Compare
    Details
  • Mozo Expert Choice Badge
    Fixed Rate Home Loan

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    5.99% p.a.
    fixed 2 years
    6.24% p.a.

    Secure a low rate and enjoy the certainty of repayments, with the BCU Fixed Rate Home Loan. Save with no ongoing annual fees. Pay up to $25,000 extra during a fixed period (T&Cs apply). Lock in for up to 5 years.

    Compare
    Details

* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.