According to RateCity’s latest Rates of the Nation report, the RBA’s 1.5% August cut has led to significant action within the mortgage and deposit spaces, yet little movement in credit card rates.
Now more than a year since the emergence of investor pricing and the ‘ideal borrower’ and the rate gap has continued to widen. Home loan rates have continued to trend downward after two RBA cuts in 2016, and a total of four cuts since February 2015, following a period of 18-months with rates on hold. Shorter-term fixed rates are sitting significantly lower than variable rates on average, suggesting there may be some room for rates to go lower in the easing cycle. Longer-term fixed rates are above variable, which suggests the low rates won’t last for ever.
As expected, the August RBA cut had a negligible impact on credit card rates, with few rate cuts made by card providers and the average rate remaining mostly unchanged. The market continues to be dominated by fully-featured premium cards with rates ranging between 19 – 21 per cent, yet there are over 100 cards available with rates under 15 per cent.
Interest rates on deposit accounts remained low across the board, with some of the most competitive rates available on bonus saver accounts. Term deposits spiked temporarily, taking some of the heat out of the big banks’ decision to withhold part of the August rate cut handed down to mortgage customers. But TD rates have since fallen to pre-August lows.