Interest rates set to remain on hold

HOME loan customers looking to shave down their debts have revelled in rock-bottom interest rates and this stretch is set to continue for some time yet.

The Reserve Bank of Australia board meets again today and it’s almost a certainty they will keep the cash rate on hold at 1.5 per cent — where they have sat since August 2016 — making it the longest-ever period where interest rates have remained untouched.

Weak wages growth, low inflation and sluggish economic growth are helping to keep the RBA’s finger off the trigger.

CommSec senior economist Ryan Felsman said he expected the official interest rate to remain stable for the rest of 2018, while IFM Investors chief economist Alex Joiner said the RBA board had made it “abundantly clear” that it did not see the need for a rise in the short term.

Last month’s US rate rise — and forecasts of at least another three more this year — are increasing the cost of overseas money that our banks borrow to lend to Australians, but this has not flowed through to local mortgages.

Financial comparison website RateCity spokeswoman Sally Tindall warned despite interest rates remaining so low borrowers should not be complacent.

“Do worry about your loan because history shows that rates will go up eventually so now is the best time to be paying down your debt,’’ she said. “That way when rates do rise you are in the best position possible. There are plenty of big name lenders, smaller credit unions and low-cost online lenders willing to offer owner occupiers rates of 3.6, 3.7 and 3.8 per cent.”

Just last week Suncorp hiked interest rates on all their variable rate loans between five and 12 basis points and the bank’s chief executive officer for banking and wealth David Carter labelled cost of funding pressures as the reason for the rate jumps.