RBA interest rates live updates: Reserve Bank hands down long-awaited interest rate cut to Aussie homeowners
And that, folks, is a wrap!
In case you missed it, the Reserve Bank today handed out a long-awaited interest rate cut for suffering Aussie homeowners.
The cash rate was cut from 4.35 per cent - where it has been wedged solid since November 2023 - to 4.1 per cent.
Within 20 minutes of the welcomed decision, all four of the big four banks said they would pass on the full cut to variable rate customers. On a mortgage of $600,000, that’ll be an immediate $92-a-month saving when the new lower rates take effect towards the end of the month.
So, the big question now is: Will we get more?
That’s the million-dollar question. RBA governor Michele Bullock highlighted the strength of the labour market when she faced the media after the rates decision and said it would be a crucial factor considered before there’s any further cuts this year.
Market watchers, who had priced in a reduction - but had showed some signs of hesitation early today about whether the board would actually go through with it - will be adjusting their models overnight and we should hear more tomorrow on their forecasts for the rest of the year.
Some are already banking on two more cuts that will take the official cash rate to 3.6 per cent by December.
And that’s where it could stay, with Bullock warning those who reaped massive rewards with record low interest rates during the pandemic that the cash rate would be returning to a more neutral setting.
But, in this day and age, a saving’s a saving.
Use it wisely.
Thaks for joining us today.
And for all the news on what you may have missed, what it means for your budget and your mortgage, what it means for the timing of the Federal election and what the experts are saying, check out the feed below ...
Key Events
There’s a first time for everything ... even mortgage relief!
Record low interest rates brought in to keep the Aussie economy alfloat during the pandemic fuelled a nation-wide property boom.
New homeowners piled into the market and were paying sub-2 per cent mortgage rates. The more savvy ones locked in those level for years and reaped massive rewards.
But the party couldn’t last. Inflation crept up, and to control spending the RBA’s cash rate rose from 0.1 per cent in May 2022 to 4.35 per cent in Novermber 2023.
Repayments in some cases came close to doubling. The pain was real.
And now the true extent of the burden felt across family budget has been laid bare by new figures from comparison site Canstar out today that show half a millon Australian households have never experienced a rate cut.
The number of owner-occupier loans settled since the last rate cut comes in at almost 509,000. Add another 35,000 for investors.
Will they find a little joy today? We’ll find out in less than two hours.
Place your bets.
The RBA cuts rates ... so, what do you do next?
Let’s look a few hours into the future and hope against hope that the Reserve concedes Aussie mortgagees have suffered too much and enough’s enough already. We get a cut.
You struggled to make ends meet as your monthly repayments skyrocketed and there’s been no change since November 2023!
You hear the RBA is finally offering relief. What do you do next?
Mortgage expert - and The West Australian’s Your Money columnist - Bruce Brammall has the answer.
And if you think the bank will just come knocking and help you put a little bit extra into your pocket, think again.
Read more here ...
Why the RBA’s possible cash rate cut impacts all Australians
Regardless of whether you hold a mortgage or not, Tuesday’s rate decision impacts you.
For those with a home loan, the decision could see the variable rate lowered, freeing up additional cash. The cut could also spark a mortgage war between banks, potentially making even lower rates available.
For those renting, the decision could impact a possible loan held by their landlord. Although owning rental is a financial risk, some landlords safeguard their investment, raising rent with interest rates, protecting the amount they receive.
Australians who own their home without a mortgage will be keeping a close eye on the decision as it has the potential to affect their superannuation and savings balances. A lower rate could mean less interest, impacting how much cash they have to spend.
Could interest rate cut spark banking mortgage war?
If the cash rate drops on Tuesday, banks are tipped to pass on the cut in full to customers with variable rate loans.
In recent months, some banks started to lower rates in a push to secure customers and stay competitive.
Although nothing is certain, some experts predict a cut on Tuesday would spark mortgage wars, pushing banks to be more competitive and deliver lower rates to keep or acquire customers.
RBA board meets to begin deliberation
The board of the Reserve Bank of Australia are seated and have begun discussion on what to do with interest rates today.
They have assembled at Sydney’s Chifley Square, where they are being given recommendation from RBA Governor Michelle Bullock.
What does your bank think will happen with rates today?
Australia’s big four banks - Commonwealth Bank, NAB, ANZ and Westpac - all strongly believe that the RBA will deliver a cut to the cash rate on Tuesday.
All fell in line with expectations of a February cut when inflation data showed it had fallen to 2.4 per cent. But that’s not the core data the RBA focuses on. That read came in at 3.2 per cent - still outside the targeted range of between 2 and 3 per cent.
The banks differ in their prediction on how many cuts will follow and how low the rate will go.
CBA have predicted that there could be four rate cuts in 2025, bringing the rate to 3.35 per cent, a view also shared by Westpac.
NAB predict that there could be five cuts, bring the cash rate to 3.10 per cent.
ANZ, however, have predicted just two rate cuts, bringing the cash rate to 3.85 per cent.
When will the RBA make an interest rate announcement?
The Reserve Bank will announcement their decision to hold, cut, or much less likely, raise interest rates at 2.30pm AEDT.
That’s 11.30am AWST in Western Australia.
If a cut is delivered, it will be the first drop since November 2020.
Albanese concerned for Jenkins amid new video
Australia still holds “serious concerns” over the welfare of Melbourne man Oscar Jenkins, after a new unverified video purpoted to show him answering a series of questions.
Russia claims the video of the Melbourne schoolteacher, who was captured by Moscow while fighting for Ukraine, was taken last month as proof the man is still alive.
Prime Minister Anthony Albanese said he had seen the video, but remaned seriously concerned about Mr Jenkin’s welfare.
“We’ve made it clear to Russia that Mr Jenkins is a prisoner of war and that there are obligations that kick in in accordance with that,” he told ABC Radio.
“We’ve also, of course, made representations to Ukraine, including a one-on-one discussion that I have with President Zelensky, raising Mr Jenkins’ welfare. We have called for Russia to release Mr Jenkins so that he can come home to his family.”
PM pleads for common sense in rail dispute
Anthony Albanese says the Rail, Tram and Bus Union is “alienating people” as strike action causes major headaches for Sydney commuters, stressing it was a state issue but that he supported the NSW premier.
The union’s ongoing pay dispute with the NSW Government prompted 4000 services to be cancelled or delayed between Friday and Sunday, and an additional 300 axed on Monday.
“Common sense has to apply here, and I think that the union needs to acknowledge that it is alienating people through these actions of not turning up to work,” the Prime Minister told ABC.
“And there was hope on the weekend that it would be settled and it should have been.”
Albanese shares ‘respect’ for RBA ahead of rate decision
Speaking on ABC Radio ahead of the RBA’s decision on interest rates, Prime Minister Anthony Albanese says the Government “respect” the independence of the central bank.
“We respect the independent decision that they will make,” Mr Albanese said on ABC Radio.
“What our job has been to do is to get inflation down, we’ve done that. It had a six in front of it when we came to office, it’s now down to a headline rate of 2.4 per cent.”
However, the PM noted headline inflation was now “within the band range the RBA aims for”.
