It looks like interest rates will remain low for the time being, which may bring some relief to borrowers, but frustrate Aussies relying on their savings.
With the Reserve Bank of Australia (RBA) reportedly planning to keep the nation’s cash rate on hold until significant progress is made towards containing the pandemic, many banks and other lenders have been keeping their own interest rates on the low side in recent months. Some have been slashing their rates or offering extra incentives to attract new customers.
Here’s a rundown on the state of the nation’s rates at the end of July and the beginning of August 2020.
Long-distance travel may be off the cards for many of us, let alone interstate road trips. But if you’re in the market for a vehicle to help you get from A to B, there are low-interest options available to you. For example, Queensland Country Bank is offering a car loan with a rate of just 2.99 per cent, provided you’re buying a new car that you plan to pay off in less than five years.
Remember to look at a car loan’s features and benefits, as well as its fees and charges, before signing on the dotted line.
More time at home has led many of us to think more seriously about improving our living situation, such as by finally starting that project we’ve been putting off for ages. If one of those projects was “greening” your home with solar panels or a water tank, the Green Personal Loan from Australian Military Bank could let you access the funds you need and enjoy an interest rate of just 3.15 per cent, with no uniform required.
Australian credit card spending patterns have been changing in recent months. Many Australians have been borrowing less on our credit cards and making an effort to clear their debts. Also, millennials who have been looking at getting new credit cards have mostly been focused on what reward programs are available.
Before choosing a credit card with a rewards program, it’s often worth thinking about whether you’re likely to earn enough reward points from your everyday card spending that the value they offer may outweigh the cost of their annual fee.
While uncertainty may have recently delayed some property purchase plans, Australian home owners and investors have recently been rushing to refinance their mortgages.
Some mortgage lenders have been slashing interest rates left and right to attract new customers, to the point where Australia is seeing some of its first home loan interest rates with a 1 at the front. For example, Easy Street is now offering a principal and interest home loan with a variable rate of just 1.95 per cent, provided you’re taking out a loan of more than $750,000 and have a deposit of 20 per cent or more.
Term Deposits and bank accounts
Australians hoping to lock up their savings and ride out the rest of pandemic may find it harder than they expect to earn interest on their wealth at a high rate. By mid-July, RateCity found that 93 providers had cut rates on their term deposits.
Generally, the longer you agree to keep your money in a term deposit, the more interest you may be able to earn on your wealth. For example, depositing your money with Judo Bank for a five-year term could let you earn interest on your savings at a rate of 1.65 per cent.
If you’re looking at saving up your money in an emergency fund, you may be able to earn a higher rate of interest if you can keep fulfilling the terms and conditions to receive the maximum rate on a savings account. For example, Australians under 30 may be able to earn up to 3 per cent interest on their savings with Westpac if they increase their balance each month and also make five purchases with a linked account.
All data accurate as of 5 August 2020.
Disclaimer: This article contains general information only and is not intended to be used as personal advice.