Interest Rate Updates

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Keep up to date with all the latest interest rate movements, Reserve Bank of Australia (RBA) announcements, banking and home loan news, and more with the Rate Detective interest rates blog. If you would like a free comparison of your home loan against the 30 plus lenders we have on our panel fill out the form on this page and one of our senior mortgage brokers will be in touch within 24 hours.

Update May 2016 Interest Rate Decrease to 1.75%

May 24, 2016

Wow, if you cover interest rates like I do, a interest rate change in the current environment is like Greg Norman coming out of retirement to win the Masters. But the RBA have reduced rates by 0.25 basis points to 1.75%.

The discussion last year was all around a rate rise sometime in the foreseeable future. Around Xmas time that turned to neutral on future rate changes. Out of the blue, without much warning, we have a rate decrease.

Global conditions have not changed much, the reason for the change was purely domestic.

"In reaching today's decision, the Board took careful note of developments in the housing market, where indications are that the effects of supervisory measures are strengthening lending standards and that price pressures have tended to abate. At present, the potential risks of lower interest rates in this area are less than they were a year ago."

What the RBA are referring to in English is that new lending criteria has made it bloody hard to get a loan (at least it was harder than it previously was). Because it is harder to get a loan reducing interest rates to stimulate the economy will be unlikely to effect the housing market compared to when it was bloody easy to get a loan. 


April Interest Rate update

May 24, 2016

No change in April rates at 2%. 

The RBA stated that conditions around commodity prices and financial markets have stabalised a bit. Not much of an update from the RBA's end so we will leave this brief as well.


Interest Rate update March 2015

May 24, 2016

The RBA has left official interest rates unchanged at 2%. Their press release is the same as the previous months so just look down for more detail.

They did make note of the fact that commodity prices have dropped considerably, but you would have to be living in a vacuum not to know that. I think you can even get internet inside a vacuum these days, so that’s not really an excuse either. Perhaps the only one that is not aware of commodity price decreases is Clive Palmer. 


Feb 2016 rate update - No change but a big Change

May 24, 2016

Rates were left unchanged today, although there was an important change in the RBAs sentiment. The important change is that the RBA have no longer stated they are expecting a rate increase in the future. For the past 6 or 7 updates, that’s been hinted but is missing in this report.

Instead, the RBA is concerned about the global economy particularly China. I’m thinking that the chance of a rate decrease in the future rather than a rate increase is becoming a possibility.

Rates left at 2%


December rate update

May 24, 2016

The RBA are very reluctant to ever put up rates in December, as they don't want to be accused of Grinch like activities.

Whilst they are still predicting a rate rise in the future, the rhetoric around the rise is not as confident as the RBA have acknowledged that global conditions have softened particularly in the Asian region. This is likely to take the heat out of the Australian economy with a reduction of exports in the mining sector likely to occur.

Rate remain at 2%. We can't see a rate rise in the foreseeable future. 


November Rate Update - No change in rates

May 24, 2016

The RBA's announcement this month was much the same as previous months. They are hinting a rate increase at some stage, however, I am hoping that the Bitcoin will fall at some stage so I can buy in. I've been waiting 5 years. Not sure a rate increase is likely.

This is particularly the case given that the RBA stated that inflation is likely to remain within the target band for the next one to two years. Inflation within the target band would seem to go against thought of a rate rise. Generally, inflation within targets means no rate changes. Interesting to see if the next movement is up, I can’t see it. 


October 2015 - Rates unchanged again

May 24, 2016

Being an RBA board representative is like being a weather forecasted in Darwin "it's 30 and humid"....."Rates unchanged". I suspect that the board might be on an extended break and a robot is writing their updates. Much of the same this month!

The board again hinted that the cycle of rate decreases or rates left unchanged is likely to be reversed at some stage soon. However, the astute observer would notice that they have changed the rhetoric from a likely rate rise later this year to “the period ahead”. That’s probably because the year is coming to an end and they don’t want to commit to that shorter time frame for a rate rise.

We mentioned in a previous post, we still believe that for the foreseeable future that rates are unlikely to rise, but are most likely to stay the same. 


September 2015 update - no rate change

May 24, 2016

The RBA has not increased rates this month, although they hinted in the last few months that there may be a rate increase before the end of the year, but this line has been run for the last few months without any serious speculation of a rate rise in the betting markets. 

Here at Rate Detective, we remain skeptical of a rate hike as the situation in China seems to be deteriorating in terms of export opportunities. We believe that a low interest rate environment seems to continue to be likely given the current state of the economy. However, we have been wrong before, just not this year. 


Rates update August 2015 no change

May 24, 2016

The RBA today left rates unchanged at 2%. Not much to report this month. The RBA's statement seemed to be a cut and paste of last month's statement. If it was a uni assignment they maybe criticised of plagiarising their own work.

Rather than us repeating what we said last month look below!


July 2015 rates still at 2%

May 24, 2016

In a statement today, the RBA left rates unchanged for July. The RBA have hinted that they may start to raise interest rates later in the year. In a statement they RBA stated that

"In Australia, the available information suggests that the economy has continued to grow over the past year, but at a rate somewhat below its longer-term average".

The RBA stance is to promote borrowing and investing stimulating aggregate demand in the economy. 


June 2015 update no change in rates

June 02, 2015

After dropping the cash rate by 25 basis points at its last review, the Reserve Bank of Australia (RBA) today announced its decision to leave the rate steady at 2.0%. 

The global economy as continues to expand at a moderate pace. This is despite prices of some key commodities being significantly lower when compared to last year - a trend which seems to reflect an increase in supply from many countries, Australia included. Despite our increases in commodity supply, Australia’s terms of trade continue to fall. 

While the RBA expects to increase policy rate later in the year, financial conditions globally remain accommodative as other major central banks continue to ease policy. The RBA once again highlighted that long term borrowing rates for creditworthy private borrowers and sovereigns remain remarkably low, despite recent increases in bond yields. 

At our national level, the economy has continued to grow, but at a rate lower than its long-term average. Household spending has increased, and exports are also on the way up, however, weak business capital expenditure is proving to be a drag on private demand. This lack of spending exists across both mining and non-mining sectors, and appears likely to persist into the coming year. 

On the whole, our economy is expected to be operating with a degree of spare capacity for the foreseeable future.  Even with a lower exchange rate inflation is forecast to remain constant with the target over the next one or two years, as labour costs show little growth. 

Glenn Stevens has highlighted the need for monetary policy to be be accommodative in such circumstances, and our low interest rates are acting to support borrowing and spending. With lending to the housing market steady over recent months, and strong growth in lending to businesses, credit has been recording a moderate overall growth. 

Again we are seeing strong increases in dwelling prices in Sydney, with more varied trends across a number of other Australian cities. The RBA continues to work with other regulators to identify, assess, and contain any risks that may arise from the housing market. 

Looking to other assets markets, prices for commercial property and equities appear to have been supported by our lower long-term interest rates. 

Against the rising US dollar, the Australian dollar has declined significantly over the past year, however, this trend is far less noticeable against a host of other currencies. Further depreciation of our currency appears both likely and necessary, especially when taking into account the significant declines in key commodity prices. 

After leaving the cash rate unchanged this month, the Board will continue to monitor economic and financial conditions and assess whether this current policy will effectively foster inflation consistent with the target, along with sustainable growth.

 


June 2015 Announcement

June 02, 2015

We are still awaiting the June 2015 RBA update, should be any time now. THe market is not factoring in a change given the RBA reduced rates by 0.25 basis points last month. If there is a change market sentiment is that rates are likely to go down rather than up, although the weight of money is on no change. 


As always if your looking for a mortgage comparison from the 30 plus lenders on our panel contact Rate Detective on 1300 793 143


May Announcement 2015

May 05, 2015

After keeping the cash rate steady at it’s past two reviews, today RBA Governor Glenn Stevens announced the board decision to lower the cash rate by 25 basis points to 2.0 per cent. Taking into account the inflation outlook, the Board identified an opportunity to ease monetary policy as a means to reinforce recent encouraging trends in household demand.

While the global economy continues to expand at a moderate pace, commodity prices have trended downwards - with some declining quite significantly. These trends seem to reflect, most significantly, an increase in supply from several nations, Australia included. Despite this increase in exports, Australia’s terms of trade are declining.

Financial conditions globally remain accommodative. Long-term borrowing rates for sovereigns remain remarkably low, likewise for overall financing costs for creditworthy borrowers. The Federal Reserve is expected to begin upping its policy rate later in the year, but this is expected to be countered by other major central banks stepping up the rate of unconventional policy measures, and thus the global financial market is expected to remain accommodative.

Looking closer to home, Glenn Steven’s has stated the available information suggests an improvement in Australian household demand trends over the most recent six month period, along with improved growth in employment.

Weak capital expenditure is expected in both the mining, and non-mining sectors, over the coming year, and this is likely to be key element holding back private demand. The RBA expects public expenditure to also be subdued, and the economy is therefore likely to continue to operate with a degree of spare capacity for the foreseeable future. Despite our lower exchange rate, inflation is still forecasted to remain consistent with the target over the coming one to two years.

Credit is continuing to show moderate overall growth as lending to businesses strengthens. Our low interest rates are also acting to support borrowing and spending. In the housing market dwelling prices have continued their upward trend in Sydney, with results mixed in a number of other cities. Growth in lending has been steady over recent months. The RBA continues to work with external regulators to identify and contain any risks in the housing market that may arise.

Looking into other asset markets, prices for commercial property and equities have been supported by our lower long-term interest rates.

Over the past year the Australian dollar has declined against the strengthening US dollar, although less so against several other major currencies. The RBA suggests further depreciation of our dollar is both likely and necessary, due to the steep declines in key commodity prices.

While the cash rate was decreased by 25 basis points at this review, Glenn Stevens has not indicated an expectation for coming reviews.


RBA Summary April 2015

April 08, 2015

The Reserve Bank of Australia (RBA) Governor Glenn Stevens today announced the cash rate would again remain unchanged at 2.25 per cent.

In a similar press release to his March statement, Governor Stevens again highlighted the continuing strengthening of the US economy, and the slowing growth of China when compared with last year’s outcome. Moderate global growth is still expected for 2015.

With the price of oil in particular much lower than it was a year ago (as a result of both decreased demand, and significant increase in supply), commodity prices on the whole have declined over the past year. Resulting from these lower energy prices, the RBA expects a strengthening in global output and lower CPI inflation rates for the short term. In exports Australian terms of trade are continuing their decline as prices for key exports have fallen.

In finance markets conditions are accommodative globally, with long-term borrowing rates for several major sovereigns at record lows. Likewise, overall financing costs for creditworthy borrowers remain at noteworthy low levels.

In our domestic market a range of indicators suggest that Australian GDP growth continued at below-trend pace, with domestic demand growth overall quite poor - resulting from decreases in business capital expenditure. This has in turn effected unemployment rates, which have inched higher over the past year despite an upswing in employment growth. The RBA expects our economy to continue to operate with a degree of spare capacity for the foreseeable future.

Consistent with this ongoing spare capacity in the labour market, and continued pressure on employers to contain costs, wage growth is expected to remain subdued. With this, it appears likely that inflation will remain consistent with the target over the next one to two years. This is expected even with a lower exchange rate.

Credit is showing moderate overall growth. Lending to businesses has experienced growth recently and, while neither appears to be picking up further at present, growth in lending to investors in housing assets has been stronger than to owner-occupiers. Dwelling prices continued to increase strongly in Sydney, but with mixed results elsewhere in the nation. Partially resulting from declining long-term interest rates, prices for equities and commercial property have also risen.

In the currency market over the past year the Australian dollar has declined significantly against the strengthening US dollar, but this decline has been less noticeable against a myriad of other currencies. However, given the significant decline in key commodity prices, the RBA predicts further depreciation, and a lower exchange rate is expected to be needed to achieve balanced economic growth in the future.

While the cash rate remained steady at the April review the board has highlighted that an easing of policy may be appropriate over the period ahead in order to generate sustainable growth in demand, and inflation consistent with the target.


April 2015 Annoucment

April 07, 2015

At its meeting today, the Board decided to leave the cash rate unchanged at 2.25 per cent.

Key Information

  • Cash rate 2.25%
  • Inflation rate 1.7%

The market was tipping a decrease of between 0.1 and 0.25 basis points, we will keep you updated. Here were the market odds.

  • Decrease by 0.26% or more $11.00
  • Decrease by 0.01% to 0.25% $1.62
  • Stay the same $2.20 
  • Increase by 0.01% to 0.25% $51.00
  • Increase by 0.26% or more $101.00

We will have a full update on the announcement when it becomes available. 


Rates Steady March 2015

March 28, 2015

Having eased monetary policy with a 25 basis point (0.25%) decrease in official interest rates at the February review, in his March statement Reserve Bank of Australia (RBA) Governor Glenn Stevens announced the board decision to hold the cash rate steady at 2.25%. However, his statement did suggest a further easing of policy may be appropriate over the period ahead as a means to foster sustainable growth in demand, and inflation consistent with the target.

Global economic growth continued at a moderate rate in 2014, with a similar performance expected by most observers in 2015. The US economy continues to strengthen on the back of growth in private demand (in particular business investment) and strong growth in consumption, supported by further improvements in labour market conditions, decreased gasoline prices and accommodative monetary policy. China’s growth has slowed a little from last year’s outcome.

Commodity prices have declined over the past year, with the price of oil in particular dropping significantly. The declines appear to result from a combination of lower demand growth and, most importantly, significant increases in supply. These low energy prices will act to strengthen global output, and lead to lower CPI inflation rates in the near-term.

In the finance markets conditions are accommodative globally, with long-term borrowing rates for several major sovereigns at record lows over the past few months. Overall financing costs for creditworthy borrowers remain low despite some risk spreads widening.

In our domestic market a range of indicators suggest that Australian GDP growth continued at below-trend pace, with domestic demand growth overall quite poor. As a result, the unemployment rate has increased gradually over the past year, despite an upswing in employment growth. Consistent with ongoing spare capacity in the labour market, and pressure on employers to contain costs, wage growth is expected to remain subdued. With this, inflation is also expected to remain consistent with the target over the next one to two years - even with a lower exchange rate.

Housing credit is recording growth for both owner-occupiers and housing investments, with around 6 per cent, and 10 per cent increases in six-month ended annualised terms respectively. Dwelling prices continued to increase strongly in Sydney, and to a lesser extent Melbourne, but price rises in other parts of the country remained modest, with some cities experiencing a price decline.

The RBA is currently working with other regulators to understand and contain risks that could arise from the housing market. In terms of other asset markets, prices for equities and commercial property have risen, partly resulting from declining long-term interest rates.

While the Australian dollar has declined notably against the strengthening US dollar, the decline has been less significant against a host of other currencies, and remains above most estimates of its fundamental value - especially given the significant declines in key commodity prices. A lower exchange rate is expected to be needed to achieve balanced economic growth in the future.

 


Rate Decrease Feb 2015

Feb. 03, 2015

The RBA today announced 25 basis point (0.25%) decrease in official interest rates from 2.5% to 2.25%. The reduction is aimed at stimulating demand in the economy as the inflation rate has fallen to 1.7 per cent which is below the target inflation rate of between 2 to 3 per cent.

The decline has been largely blamed on a decline in commodity prices which has effected the mining sector in particular. The decline in the price of oil also resulted in a significant drop in inflation which was a contributing factor to the decision.

The decrease in interest rates is likely to spark increased interest in the housing market as rate increases are unlikely in the foreseeable future. At Rate Detective, we have been inundated today with a number of clients requesting to fix loans as well. A lot of the major banks are yet to announce their movements, so we suggest to clients to contact us and we will monitor over the next week or two movements in the banks fixed and variable interest rates to find you the most competitive product. 


Cash Rate Stays at 2.5 Per Cent in October

Oct. 08, 2014

Australia's cash rate remains unchanged at 2.5 percent, said Reserve Bank of Australia (RBA) Governor Glenn Stevens in a statement released earlier today.

Overall, the global economy posted continuous growth. Economic growth of China is seen to slow down in recent months, but remains in line with the policymaker's objectives, said Mr Stevens. Prices of commodities further declined, but the weakening property markets may pose a challenge in the coming months.

In general, the RBA sees growth to be "a little below trend" in the next few months, with markets showing low chances of posting any increase in interest rates as long-term rates and risk spreads have remained very low. Overall, figures suggest that Australia maintains its moderate economic growth.

Data show unusual changes in the labour market. While employment seems to improve this year, growth in wages significantly slowed down, and it will take a long time before a consistent decline in unemployment rate can be seen. The country's unemployment rate is at 6.1 per cent as of 11 September, which is slightly lower than the previous month's 6.4 per cent.

The strong US dollar has led to a decline in the exchange rate. However, it is high based on historical standards since prices of key commodities continue to decline.

In the next couple of years, inflation is predicted to remain steady at 2-3 per cent target. The accommodative monetary policy is expected to continue to "provide support to demand and help growth to strengthen over time." According to the Board, monetary policy is designed to promote sustainable growth in demand and inflation rate which are proved to be consistent with the target. With the current data, it is likely that interest rates will remain stable in the coming years.

 


RBA Maintains Cash Rate at 2.5 Per Cent in September

Sept. 03, 2014

In today’s monetary policy statement, Reserve Bank of Australia (RBA) Governor Glenn Stevens announced the Bank’s decision to leave the cash rate at 2.5 per cent.

The statement hardly differed from previous ones given by the Governor. For one, the Reserve Bank continues to expect the country’s growth to be “a little bit below trend over the year ahead” due to the decline in investments in the resources sector and the moderate growth expected from capital spending despite an improvement in investment intentions from other sectors. On a more positive note, Business Conditions in July rose to 8 from the previous 2 and Business Confidence went up to 11 from the previous 8, while Consumer Confidence in August went up by 3.8 per cent, which previously went up only by 1.9, and the Consumer Confidence Index during the same month went up to 98.5 from the previous 94.9. Mr Stevens said that these are suggestions that “moderate growth in the economy is occurring.”

Meanwhile in the labour market, the Governor noted the rise in unemployment. The country’s unemployment rate rose in July to 6.4 per cent from the previous 6.0 per cent. Full time employment grew by 14,500 and part time employment fell by 14,800 during the same period. He said, however, that “the labour market has a degree of spare capacity”, which meant that it may take some time “before unemployment declines consistently.” In addition, he said that “[g]rowth in wages has declined noticeably and is expected to remain relatively modest over the period ahead,” which should help maintain the Bank’s inflation target despite the lower levels of the exchange rate.

Mr Stevens also mentioned that the low interest rates has led to increased competition among lenders. Lenders have been aggressive as of late with a series of cuts in their interest rates despite the lack of cuts from the RBA since last year. Of note was the decision of the country’s three largest banks to cut their three-year fixed rates at under 5 per cent, in a bid to attract more customers. These banks were The Commonwealth Bank, National Australia Bank, and Westpac. The effect of these cuts is yet to be seen, as home loans in June has grown only by 0.2 per cent, while investment lending for homes during the same month fell by 0.3 per cent.

Most recently, businesses helped with the increase in credit growth, said Mr Stevens. He also added that “[t]he increase in dwelling prices continues. Most recent figures show that the country’s House Price Index for Q2 went up by 1.8 per cent over the previous quarter, and by 10.1 per cent over the past 12 months.

The dollar continues to be overpriced according to the Governor despite the decline in key commodity prices. He said that the dollar’s value offers “less assistance than would normally be expected in achieving balanced growth in the economy.”

Overall, the Reserve Bank sees that the current monetary policy “should provide support to demand and help growth strengthen over time.”


Cash Rate Remains at 2.5 Per Cent in August

Aug. 07, 2014

As expected, Reserve Bank of Australia (RBA) Governor Glenn Stevens said in a statement that the Bank would maintain rates at 2.5 per cent in August.

Mr Stevens painted a fairly positive picture of the Australian economy, while keeping everyone’s expectations as realistic as possible. The statement has been consistent with the previous statements he has given in the previous months, including the expansion in housing construction where he said “strong expansion” is now under way. While building permits fell by 5.0 per cent in June over the previous month, it has gone up by a whopping 16.0 per cent over the past 12 months.
    
There was also mention about the continued and significant decline in investments in the resources sector. The Governor said while that there are signs indicating a desire to invest in other sectors, “these plans remain tentative” as businesses prefer a wait and see approach before starting to invest heavily. Overall, however, Mr Stevens said that the RBA expects “a little below trend” growth in the near future.

As for unemployment, more time is expected before it “declines consistently” even if there are signs of improvement over the past several months. While inflation has recently been on the rise, Mr Stevens said that modest growth in wages would help temper its effect.

With the cost of dwelling prices, the Governor said that it has been “slower” compared to the previous year, although it still continues to rise.

The tone was firmer with regards to the exchange rate this time. Instead of merely indicating that it remains high by historical standards despite the declines in key commodity prices, Mr Stevens said that it is “offering less assistance than it might in achieving balanced growth in the economy.”


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