At its latest meeting on 24-September 2024, the Reserve Bank Board (RBA) agreed to further hold cash rate target at 4.35%.
Details of this decision can be found on the RBA website. The next board meeting will be on 5 November 2024.
Homeowners have been waiting to see when the RBA will cut cash rate which has been 4.35% since November 2023.
How does this decision affect you?
Gives me confidence to proceed with my financial goal
Relieved that there was no cash rate increase
Makes no difference to me. I am comfortable with repayments
Makes no difference to me. I am uncomfortable with repayment
This news will in no doubt be a relieve to homeowners who have been hoping for no further rate rate increase. Some had hoped that the cash rate cut may come after the recent 0.5% cut by the US Federal Reserve which joined New Zealand, Canada and the UK, providing some reprieve to homeowners. The RBA Board has been firm on the need to maintain the restrictive monetary policy for the time being and the goal of returning inflation to target remains the RBA priority.
Consumer Price Index (CPI) is 3.8% (ending June 2024) according the Australian Bureau of Statistics. This is higher than the March figure of 3.6%. In August, Australia's annual inflation rate was 2.7%, down from July's 3.5%. The inflation is anticipated to return to 2-3% in the second half of 2025.
What are the Big Four banks saying?
Commonwealth Bank – CBA is still optimistic that we will see a 0.25 per cent cash rate cut in December 2024. Their forecast was pushed out from November to December following recent strength in employment growth.
NAB – NAB brought forward its forecast of when the RBA will cut interest rates to February 2025, rather than May next year. It’s anticipating a 0.25 per cent decrease to 4.1 per cent in February, followed by one cut per quarter until the cash rate is 3.1 per cent in early 2026.
Westpac – Westpac expects the cash rate will remain unchanged until February, which will mark the first of four 0.25 per cent cuts throughout 2025.
ANZ – ANZ agrees the RBA is likely to start an easing cycle from February 2025.
What does this mean for you?
The RBA cash rate decision affects the interest rate lenders offer on the loans provided. Whether you are on Fixed interest rate or Variable interest rate loan, a health-check of these loans is generally advisable.
If lenders were to pass on the cash rate cut for example, homeowners on variable interest rates could save on their repayments. Running through a small calculation using 0.25% cash rate cut would result in roughly $92 off monthly repayments on a $600,000 loan and $114 per month savings on a $750,000 mortgage.
Next steps?
It is important to review your home loan regularly to make sure it is best for you. If you are struggling with your mortgage repayments, as a priority will be to seek advice about whether your home loan is right for you.
If you are looking to buy a home, getting the right advice for you is important so that you can make informed decisions.
As a specialist finance broker, we will compare the market for you, explain what your options are, and advice if there is a more competitive home loan with interest-saving features, such as offset account and redraw facility.
We offer you an obligation-free loan review whether you are refinancing or getting your first loan. Let us do the research, and find you a loan tailored to your unique requirements.
We are a specialist finance broker in residential, commercial and development finance lending. We can support you with:
Development finance
Residential home loans including refinance
Contact us today and let's discuss your home loan needs.
Comments