With the Reserve Bank of Australia (RBA) keeping the cash rate on hold at its February 2024 meeting, some are forecasting that interest rates may not start falling again until later in 2024. While lower inflation and interest rates will give many Australian budgets some welcome relief in the future, the cost of living is putting substantial pressure on households.
Remember that banks and lenders may choose to adjust their own interest rates at any time and not just in cycle with the RBA. It may be worth comparing a few different finance options and considering whether jumping ship (or bank) could be a smart decision.
Here are some of the top-rated borrowing and saving options from RateCity in February 2024:
Some of the lowest home loan rates
The RBA’s decision to keep rates on hold may be welcome news to the many mortgage holders who have been experiencing financial stress in recent months, especially those who reverted from ultra-low fixed rates that were available during the COVID-19 pandemic. But when will we start seeing rate cuts?
Economists from some of the major banks have forecast that the RBA could cut the cash rate as soon as late 2024, which could see banks cutting home loan interest rates in turn. It remains to be seen whether factors such as lower-than-expected inflation and higher unemployment could potentially bring these rate cuts forward.
Without a foolproof crystal ball, there’s no way to accurately predict Australia’s economic future. While you could consider waiting for rates to fall, you could also compare some of the competitive refinancing options available for borrowers hoping to make their home loan more affordable or access equity in their property:
Some of the top-rated refinance home loan options
Some of the top-rated home loans for refinancing, based on their Real Time Ratings™
- Greater Bank Great Rate Home Loan: 5.94% Variable (Comparison Rate 5.95%)
- Pacific Mortgage Group Standard Variable Home Loan: 5.89% Variable (Comparison Rate 5.89%)
- Abal Banking Basic Low Rate Home Loan Offer: 5.75% Variable (Comparison Rate 5.88%)
- Gateway Bank Green Plus Home Loan: 5.79% Variable (Comparison Rate 6.08%)
- Reduce Home Loans Eco Home Loan Variable: 5.84% Variable (Comparison Rate 5.89%)
Source: RateCity.com.au. Data accurate as of 19/02/2024
Some of the highest savings account and term deposit rates
The prospect of lower interest rates later in the year could be welcomed by borrowers, but savers may have a different opinion. Lower interest rates could mean earning less interest on the money in your savings account in the second half of this year, provided your bank or Authorised Deposit-taking Institution (ADI) passes any cash rate cuts from the RBA on to savings customers.
If your goal this year was to save more money to put towards some future purchase or project, it’s possible that these rate changes could affect your plans. It may be worth comparing alternative savings solutions along with some saving and budgeting strategies so you can be better prepared in case of future changes.
Some of the highest savings account rates
- 5.55% – ME Bank HomeME
- 5.50% – MOVE Bank Growth Saver Account
- 5.50% – Teachers Mutual Bank Target Saver
- 5.50% – ING Savings Maximiser
- 5.35% – Virgin Money Boost Saver
Source: RateCity.com.au. Data accurate as of 19/02/2024
Another savings option could be to set up a term deposit, which lets you fix the interest rate in advance for a predetermined length of time, so you can easily calculate in advance exactly how much interest you should earn on your savings. Even if savings rates fall in the future, your term deposit will keep earning interest at the original rate for the remaining term, until it reaches maturity and the time comes to roll over. If that rate is higher than Australia’s inflation rate, you could be able to keep your money from going backwards (just keep tax in mind when making your calculations).
Remember that in many cases, money in a term deposit can’t be easily withdrawn without providing over a month’s notice. This means term deposits are often popular with savers who are building wealth from a lump sum of saved cash over time to reach long-term goals, rather than regularly making smaller deposits into a savings account.
Some of the highest-term deposit rates
- 5.20 for 10 months – Defence Bank Premium Term Deposit
- 5.20% for 9 months – G&C Mutual Bank Term Deposit (12 months and less)
- 5.20% for 6 months – Gateway Bank Term Deposit
- 5.20% for 12 months – Qudos Bank Term Deposit
- 5.10% for 7 months – BCU Bank Term Deposit
Source: RateCity.com.au. Data accurate as of 19/02/2024
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