The announcement comes as little shock with economists universally agreeing the rate would remain unchanged. 

The Reserve Bank (RBA) had previously indicated the rate would remain unchanged until progress was made towards full employment and inflation sat between its desired band of 2-3%. 

Unemployment currently sits at 7.5%, but is expected to exceed 10%, and Australia is currently experiencing deflation, with the consumer price index falling 0.3% over the year.

Eyes now turn to tomorrow's national accounts, where GDP is expected to drop by over 5%, the largest ever contraction.

Looking to compare low-rate, variable home loans? Below are a handful of low-rate loans in the market.

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LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees Max LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkComparePromoted ProductDisclosure
6.04% p.a.
6.08% p.a.
$3,011
Principal & Interest
Variable
$0
$530
90%
4.6 Star Customer Ratings
  • Available for purchase or refinance, min 10% deposit needed to qualify.
  • No application, ongoing monthly or annual fees.
  • Quick and easy online application process.
Disclosure
5.99% p.a.
5.90% p.a.
$2,995
Principal & Interest
Variable
$0
$0
80%
Apply in minutes
  • No application or ongoing fees. Annual rate discount
  • Unlimited redraws & additional repayments. LVR <80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
 Disclosure
6.09% p.a.
6.11% p.a.
$3,027
Principal & Interest
Variable
$0
$250
60%
  • No annual fees – None!
  • Get fast pre-approval
  • Unlimited additional repayments free of charge
 Disclosure
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

Important Information and Comparison Rate Warning

RBA Governor Phillip Lowe said economic recovery was occurring across the nation, but would be bumpy and uneven as a result of the Victorian COVID outbreak, especially when it came to jobs. 

"Employment increased in June and July, although unemployment and underemployment remain high," Dr Lowe said.

"The virus outbreak in Victoria and subdued growth in aggregate demand more broadly mean that it is likely to be some months before a meaningful recovery in the labour market is underway.

"In the Bank's central scenario, the unemployment rate rises to around 10% later in 2020 and then declines gradually to be still around 7% in two years' time."

Dr Lowe added wage growth and inflation would remain stunted for at least the immediate future. 

"Wage and prices pressures remain subdued and this is likely to continue for some time," he said.

"Inflation is expected to average between 1 and 1.5% over the next couple of years."

The central bank also announced it was expanding its additional funding to Authorised Deposit Institutions (ADIs), up until at least the end of June of next year.

Dr Lowe said ADIs had drawn $52 billion of this extra funding already.

"Today's change brings the total amount available under this facility to around $200 billion," he said. 

"This will help keep interest rates low for borrowers and support the provision of credit by providing ADIs greater confidence about continued access to low-cost funding."

Record low cash rate keeps lending affordable 

CoreLogic Head of Research Tim Lawless said the record low 0.25% cash rate was helping people to continue borrowing money to purchase homes.

"The low cash rate has helped to bring mortgage rates down to record lows; new loans for owner-occupiers are attracting an average variable mortgage rate around 2.7%, with fixed rates even lower," Mr Lawless said.

"Such a low cost of debt has been a key factor in supporting housing demand and helping to insulate housing values. 

"Through the pandemic to date, housing values nationally have slumped by only 2.0% and housing activity has trended only about 5% lower than a year ago over the past three months."

Mortgage Choice CEO Susan Mitchell said the low cash rate and current housing market created a unique opportunity for savvy buyers. 

“As we enter what will be an unusual Spring selling season, opportunities remain for first home buyers who are ready to put their foot on the property ladder," Ms Mitchell said.

"The low cash rate continues to drive historically low home loan interest rates.

"This coupled with unprecedented levels of Government support in the form of grants and incentives creates opportunity for prospective buyers."



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