Anyone with a home loan right now is likely to be feeling the pressure from the rising cost of living and will be hoping their interest rates will go down. But any changes to mortgage bills will depend on what comes out of the Reserve Bank of Australia (RBA) meeting this week. Here’s a quick recap of where we’re at to get you up to speed.
What is the Cash Rate Target?
Currently, the cash rate target is 4.35 per cent. This figure, set by the Reserve Bank of Australia (RBA), influences how much commercial banks charge customers for borrowing money. When the RBA changes the cash rate target, interest rates for mortgages don’t automatically change – that decision lies with the individual banks. Banks usually release statements post-RBA meeting to indicate whether they’ll change their rates. If the RBA decides to alter the cash rate, major news outlets will publish summaries of which banks are changing their rates. Additionally, tools like calculators will help mortgage holders understand how the changes impact their payments.
When is the Next RBA Meeting?
The next RBA meeting starts on Monday, but the announcement about rate changes won’t come until Tuesday afternoon. The RBA board meeting spans two days, concluding with a media statement at 2:30 PM AEST on Tuesday.
When Will Interest Rates Go Down?
No one knows for sure, so we rely on educated guesses from economists and banking industry insiders. Predictions vary, but none of the big four banks expect a rate drop this week. Here’s what they forecast:
- ANZ: February
- Commonwealth Bank: November
- NAB: June next year
- Westpac: December
What Will It Take for Interest Rates to Go Down?
A lower inflation rate is key. The RBA Board needs to be confident that inflation is moving sustainably towards the target range of 2-3 per cent, currently at 3.8 per cent. The Consumer Price Index (CPI), published quarterly by the Australian Bureau of Statistics, measures inflation. The next CPI release is due at the end of October. Additionally, the Monthly Consumer Price Index Indicator, published more frequently, provides interim insights with the next update at the end of this month.
How Long Has the Cash Rate Been 4.35 Per Cent?
Since November last year. Despite five RBA meetings since then, the rate has remained unchanged.
When Was the Cash Rate Last This High?
More than a decade ago, in November 2011, when it was 4.5 per cent.
How Many More RBA Meetings Are There This Year?
There are three more meetings scheduled for:
- September 23-24
- November 4-5
- December 9-10
For personalized mortgage advice and to navigate the changing interest rate landscape, contact BOA & Co. today. Our team of experts is here to help you make informed decisions and secure the best mortgage options for your situation. Call us at 1300 952 286, email info@boanco.com.au, or visit our website at www.boanco.com.au.