Today's cut takes the cash rate to 0.25%, and is likely to be the RBA's last cut for a long time, having recently flagged that it would not lower the cash rate below this threshold.
Thinking about refinancing to a low-rate, variable owner-occupier home loan? The table below displays some of the lowest-rate variable home loans currently on the market for owner occupiers:
Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.
The RBA usually only meets on the first Tuesday of every month (except January), with its next regular meeting scheduled for Tuesday April 7.
But earlier in the week, RBA Governor Philip Lowe said there would be an additional meeting to "announce further policy measures to support the Australian economy".
This isn't the first time the RBA has made a rate cut outside of its regular meeting - it did one in July 1997, for example - but it is the first time two changes have been made in one month.
Not even at the height of the global financial crisis (GFC) did the Reserve Bank resort to such measures.
However, the crippling effects of the coronavirus on both the domestic and global economy forced the RBA's hand to take this unprecedented measure in a bid to stabilise Australia's economy and soften some of the blows to come.
Governor Lowe's address was very different to one he usually delivers each month.
He admitted that the primary response to the virus is to manage the health of the population, but stated that monetary and fiscal policy play an important role in reducing the economic and financial disruption it causes.
"At some point, the virus will be contained and the Australian economy will recover," he said.
"In the interim, a priority for the Reserve Bank is to support jobs, incomes and businesses, so that when the health crisis recedes, the country is well placed to recover strongly."
Mr Lowe also said the board would not increase its cash rate target until full employment is reached and inflation is "sustainably" within the 2-3% range.
He also stated that quantitative easing will start tomorrow, and that banks will be able to obtain additional funding if they increase lending to business, especially to small and medium-sized businesses.
This lending facility is for up to $90 billion, and more details will be provided in a second statement coming later today.
"Today's policy package from the Reserve Bank complements the welcome fiscal response from governments in Australia," he said.
"Together, these measures will support jobs, incomes and businesses through this difficult period and they will also assist the Australian economy in the recovery."
There's already been a flurry of activity in just the few minutes since this announcement.
Commonwealth Bank CEO Matt Comyn said these are unprecedented times, and call for unprecedented measures.
Commbank has already:
Reduced fixed rate home loans for one, two and three years by up to 70 basis points to a new low of 2.29% p.a.
Launched a new term deposit rate of 1.70% p.a. for terms over 12 months (an increase of 60 basis points)
Reduced small business loan rates by up to 100 basis points
We are making changes to home loan repayments which will provide, on average, $400 cash a month to customers, or $3.6 billion to households across Australia.
All products with a link to a product provider’s website have a commercial marketing relationship between us and these providers. These products may appear prominently and first within the search tables regardless of their attributes and may include products marked as promoted, featured or sponsored. The link to a product provider’s website will allow you to get more information or apply for the product.
By de-selecting “Show online partners only” additional non-commercialised products may be displayed and re-sorted at the top of the table. For more information on how we’ve selected these “Sponsored”, “Featured” and “Promoted” products, the products we compare, how we make money, and other important information about our service, please click here. Rates correct as of . View disclaimer.
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We strive to cover a broad range of products, providers, and services; however, we do not cover the entire market. Products in our comparison tables are sorted based on various factors, including product features, interest rates, fees, popularity, and commercial arrangements.
Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes.
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For home loans, the base criteria include a $400,000 loan amount over 25 years. For car loans and personal loans, the base criteria include a $30,000 loan over 5 years. These rates are only examples and may not include all fees and charges.
*The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
Monthly repayment figures are estimates that exclude fees. These estimates are based on the advertised rates for the specified term and loan amount. Actual repayments will depend on your circumstances and interest rate changes.
Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you.
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We may include products and services from loans.com.au, CarLoans.com.au, OnlineAuto.com.au, and YourMortgageBroker Pty Ltd, all associated with the Firstmac Group. Importantly, these brands are treated like any other commercial partner.
The information provided by Savings.com.au is general in nature and does not take into account your personal objectives, financial situation, or needs. We recommend seeking independent financial advice before making any financial decisions. Before acquiring any financial product, obtain and read the relevant Product Disclosure Statement (PDS), Target Market Determination (TMD), and any other offer documents.
Rates and product information should be confirmed with the relevant credit provider. For more information, read Savings.com.au’s Financial Services and Credit Guide (FSCG).
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