RBA gives Aussie borrowers an Easter break by pausing cash rate hikes

The Reserve Bank of Australia (RBA) has delivered a much-needed Easter break to Aussie mortgage-payers, holding the cash rate steady at its April board meeting. 

The past year has seen the RBA raise the cash rate at each consecutive monthly meeting, with a view to getting Australia’s soaring inflation in line, and banks and lenders have raised their home loan variable rates in turn.

This has seen the average mortgage get significantly more expensive for Aussie borrowers, and has led to questions about whether the RBA has effectively steered the economy through the current cost of living crisis.

Today’s interest rate reprieve will likely mean that banks and lenders will hold off the variable home loan rate rises that have become standard each month, giving Aussie borrowers some breathing room before we see what the rest of the year brings.

Predictions show more rate rises likely

While borrowers may have had a reprieve this month, economists from Australia’s major banks are still predicting more rate rises in months to come, meaning variable rate mortgages are likely to get more expensive before things settle.

Westpac, NAB and ANZ have all predicted that the cash rate will peak at 4.10% before the RBA fully puts the pause on rate rises – this would mean two more 25 basis point rises in months to come, from the current level of 3.60%.

The RBA board meets again on Tuesday May 2, and may well announce another cash rate hike then, but longer term, the board of the bank itself could be set for some big changes.

Reserve Bank set for major shake-up

The RBA is facing its biggest shake-up in decades, with a major review of the central bank looking likely to recommend big changes to the way it does business, and communicates with the public.

A panel of experts spent the last six months reviewing the operations of the RBA, and handed its review to Treasurer Jim Chalmers last week. While the results are not yet public, it’s expected the report may suggest some key changes.

Among these possible changes could be different selection criteria for the bank’s board, to ensure its members have expertise across economics, financial and labour markets, and fewer meetings of the bank’s board to discuss rate rises.

It is also expected that the review will recommend greater transparency for the RBA board, including regular press conferences or public briefings by the bank’s governor to explain its monetary policy decisions.

How can you save on your home loan rate?

If your fixed rate home loan is about to come to an end, or even if you think you could be getting a better deal than what you’re currently paying, you can compare home loans with Canstar. If you are thinking about refinancing your current home loan to a new lender and want to know more about the process and how it works, Canstar has a list of seven mistakes to avoid when refinancing, so you can be better prepared.

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