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Home Loan Variable: 5.94% (5.95%*) • Home Loan Fixed: 5.79% (6.39%*) • Fixed: 5.79% (6.39%*) • Variable: 5.94% (5.95%*) • Investment IO: 6.14% (6.58%*) • Investment PI: 5.99% (6.61%*)

June 2019 Reserve Bank Interest Rate Cut

June 2019 rate cut – Why did the Reserve Bank cut the cash rate?

On 4th June 2019, the Reserve Bank announced the cash rate would be reduced by 0.25% p.a. to a record low 1.25%p.a. The basis of this decision was to support employment growth and to attempt to boost inflation within back up into the 2-3% target range.

The low inflation rate is reflective of the fact that consumer spending is quite slow at the moment. This is expected when wage growth is quite slow and consumer confidence is battered by falling property markets. The hope from the Reserve Bank is that by cutting rates it will give consumers more confidence, as well as cash flow, to start spending again.

The other main aim of the rate cut is to reduce the unemployment rate. In layman’s terms, if interest rates are lower then businesses may gain the confidence to higher more staff. More people in work generally means more people spending money which then should push inflation back up into the target range.

This rate cut is also expected to support the Sydney and Melbourne property market’s, which have been in decline in the past 12 months.

See https://www.rba.gov.au/media-releases/2019/mr-19-15.html for the official Reserve Bank statement.

Has your lender passed on the full 0.25% p.a. rate cut?

As the last few years have shown lenders do what they want when it comes to interest rate adjustments. Unlike the old days, their home loan interest rates are no longer tied to the Reserve Bank cash rate. There have been numerous ‘out of cycle’ rate increases in recent times so I personally wasn’t expecting many lenders to pass on the full 0.25% p.a. rate cut.

Once the Reserve Bank announced the rate cut ANZ was the first major lender to make an announcement. They announced a rate cut of 0.18% p.a. which I thought confirmed my suspicions.

Since that first announcement, I have been pleasantly surprised that most lenders have passed on the full rate cut, including majors such as Commonwealth Bank (CBA) and National Australia Bank (NAB).

Below is a summary of the rate cuts announced by a large percentage of the more than 40 lenders on our panel.

Has your lender passed on the full 0.25% p.a. cut? If not it might be a good time to review your loan to find out whether there is a better deal out there for you. Feel free to get in touch for a loan review.

Lender Effective Date Standard Variable Rate Decrease
Adelaide Bank 28/06/2019 P&I 0.20% IO 0.15%
AFGHL Alpha 28/06/2019 P&I 0.20% IO 0.15%
AFGHL Edge 14/06/2019 0.25%
AFGHL Link 21/06/2019 0.20% new loans & loans settled after 31/12/2018. 0.25% for loans settled before 31/12/2018
AFGHL Retro 21/06/2019 0.20% new loans & loans settled after 31/12/2018. 0.25% for loans settled before 31/12/2018
AMP 21/06/2019 0.25%
ANZ 14/06/2019 0.18%
Bank of Melbourne 18/06/2019 O/O (P&I, IO) INV (P&I) 0.20% INV (IO) 0.35%
Bank of Sydney 18/06/2019 0.25%
Bank SA 18/06/2019 O/O (P&I, IO) INV (P&I) 0.20% INV (IO) 0.35%
Bankwest 25/06/2019 0.25%
Bank of QLD 25/06/2019 0.25% (Clear Path O/O and Intro Rate 0.15%)
Beyond Bank 25/06/2019 0.15% to 0.25% depending on loan product
Citi 25/06/2019 0.25%
Commonwealth Bank 25/06/2019 0.25%
CUA 18/06/2019 0.10% – 0.25%
Firefighters Mutual 25/06/2019 0.25%
Health Professionals 25/06/2019 0.25%
ING 25/06/2019 0.25%
Macquarie 7/06/2019 0.25%
ME 27/06/2019 0.25%
NAB 14/06/2019 0.25%
Newcastle Permanent 17/06/2019 0.25%
Resimac 26/06/2019 up to 0.18%
St George Bank 18/06/2019 O/O (P&I, IO) INV (P&I) 0.20% INV (IO) 0.35%
Suncorp 21/06/2019 0.25%
Teachers Mutual 25/06/2019 0.25%
Unibank 25/06/2019 0.25%
Virgin Money 25/06/2019 0.25%
Westpac 18/06/2019 O/O (P&I, IO) INV (P&I) 0.20% INV (IO) 0.35%

 

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