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RBA Makes a Safe Bet on Cup Day

Despite having past form for lifting official interest rates on Melbourne Cup day, it was a safe bet for the Reserve Bank of Australia (RBA) to resist cracking the whip on the first Tuesday in November, says mortgage broker network 1300HomeLoan.

1300HomeLoan John Kolenda said it has now been seven years since the RBA lifted its cash rate with the last increase being on the day that stops the nation in November, 2010.

Mr Kolenda said the RBA holding official rates at the all-time low of 1.5 per cent since its last movement in August, 2016, has provided much needed stability for mortgage holders.

“The RBA has a history of rate movements on Melbourne Cup day but there was little chance of the central bank reacting at its November board meeting despite some of its overseas counterparts lifting their rates,” he said.

Mr Kolenda said while the RBA has indicated it is unlikely to make further interest rate cuts, it will need to tread carefully about any future rise for the cash rate.

“While more favourable employment figures and an improving outlook for the global economy point to the possibility of rate rises, future increases will have a much more significant impact on consumers than previously,” he said.

“The recent inflation data will also likely mean the RBA takes a precautionary approach with any announcements surrounding rises in rates over the short term.

“The last RBA rate rise was seven years ago and there are currently many thousands of mortgage holders who have never experienced a hike in the cash rate. Hopefully any potential increases will be miniscule and implemented over a protracted period to avoid causing unnecessary panic among mortgage holders.”

Mr Kolenda said while official rates remain low, the lending environment remained highly competitive and home loan customers should not be complacent as it was always possible to get a better deal and save money.

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