The RBA has cut the cash rate for the first time since 2020. This might be a relief for homeowners, but is inflation really under control?
RBA Cuts Cash Rate for The First Time Since 2020
nned2say on 18/02/2025 - 14:40
Last edited 18/02/2025 - 14:47
Last edited 18/02/2025 - 14:47
Poll Options
- 32Banks will cut rates immediately
- 340Banks will cut rates within a month
- 15Banks will cut rates within a week
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What percentage of your spend is housing and what is on everything else that might inflate as a result?
This stuff actually does make a difference to people.
If you have a half million dollar loan and $10-$20 is going to actually 'make a difference', you are seriously in trouble….
I'd be more worried about all the new taxes that the Victorian treasurer said she was going to introduce…
Why hike rates by 0.25 then, as they last did in November 2023, if it makes so little difference?
Its proven that this stuff affects spending, even the small interest rate moves, regardless of how any words you bold.
Its proven that this stuff affects spending
Nah, it’s purely due to the oncoming election
@jv: You actually think the sort of people that run the RBA would be Labor supporters? Wow, what a take.
More worrying was how desperate some LNP types were for no cut as they think it might help them politically. Kind of sums up their view of ordinary people.
@jv: Then why did they raise rates by 0.25% if it makes no difference to the cash flow? That had nothing to do with an election.
That had nothing to do with an election.
Exactly… There was no election in the near future then, so the govt didn't care…
So why do it if "$20 makes no difference"
So Albo can claim that he has dropped interest rates and controlled inflation. 🤣
Can you send me $20 a fortnight please. Makes no difference to you
When I look at my grocery bill, the price to put fuel in my car, my gas or Electricity bill , even the price of bananas……very little difference…..
Anything from Ubank?
From past experience, they usually make their rate cut decision known on Friday. And then take three weeks to implement it. But to their credit they took the same amount of time to lower and raise rates.
The bank will cut the rates in savings accounts.
Is a term deposit a good idea if they are going to keep cutting rates? Can you lock in ?
Banks will have already priced expected cuts into TD rates. TDs, like fixed loans, are a gamble but do provide certainty if that is what you want.
OT… how much rate reduction should I consider refinancing my fixed rate? I'm currently at 5.94
If your LVR is under 70 and you're borrowing over 750k I'd be surprised if you weren't able to get under 5.8% with a big bank or 5.7% with a smaller bank with offsets after these rates are implemented.
Minus the break fees since they are on a fixed rate. It may be better to wait out a 5.94 rate for now, depending on how long is left.
Agree and also consider which bank you expect to pass on all the rate cuts for at least 12-18 months or you'll be back looking again
Just what we need: Banks over-lending to borrowers again, followed by an associated rise in house prices, followed by 3 years of people complaining about the size of the repayments on the mortgage they were forced to take out.
Australians will leverage up to their eyeballs regardless of interest rates. We collectively see housing as a never-fail investment product, so leverage yourself into mortgage stress, as in a decade you'll be laughing all the way to the bank as the next buyer takes a massive loan to buy your house.
There really isn't a solution to this problem as only one third of Australians have a mortgage. The other two thirds are cheering on their astute investment decision, unless they have 30 year old children still living at home because house prices have been bid up so high.
The easiest way to deal with this is to make lending standards more stringent and make it easier for homeowners to get their homes repossessed (will lead to lower house prices) but no one seems to want this.
People want low house prices but without punishing those who can't afford their mortgage - it doesn't work that way. If you give people with a mortgage every excuse under the sun and make it almost impossible for a bank to foreclose, of course people will abuse that.
The solution is to increase penalties on those who are financially unintelligent.
BS. The solution is just to get rid of free kicks for investors re home ownership.
Negative gearing is a ponzi scheme@Protractor: Negative gearing has a minimal effect on the market. Investors are a minority, too, and negative gearing benefits are more than offset by the land tax they pay - whereas PPOR owners pay no land tax and no CGT. Why would punishing the minority be more effective than making stringent rules that affect everyone?
If you wanted tax changes, imposing land tax and CGT on PPOR owners would have a much larger effect on the market. Let's do that. They can have negative gearing too, just to make the playing field fair.
sad day for savers :(
They've had their time
Time to spend spend spend…. and the circle repeats.
Approx 40% have a mortgage (and are happy), 60% who have savings less so.
And that 40% do a lot of the spending that keeps the economy moving. A big chunk of the 60% are retirees who by nature spend less and are not as active in the economy. Also our economy, like it or not, is dependent on property prices remaining strong. The time to do something about house prices was 20-25 years ago and it didn't happen.
Dutton: Urges RBA to resist pressure to cut rates
Also Dutton: Prays for rate cuts
Brilliant leader
Its not that Dutton doesn't want the interest rate to be cut.
He just wanted the RBA to hold off on the cuts until he becomes PM, and then he can take credit for the cut.Is that bald headed guy really going to get voted as priminister?
He’s someone who really doesn’t know what he stands for, based on his recent remarks I’m waiting for him to announce that he wants to buy New Zealand
@Gunnar: We should buy New Zealand, and New Zealand should pay for it. That should be awesome deal for NZ - OzBargain level deal
Straw polls indicate Voldemort will probably get in as our next PM.
He thinks he is Australias Donald Trump.He has already picked out his "Minister for Govt Efficiency".
https://www.theguardian.com/australia-news/2025/jan/25/peter…
In politics, sometimes you don’t vote to chose a leader but vote to outcast the current one. Effectively same result via different route.
@PopCounty: Sadly that's been the state of modern politics for quite some time. It's not about what you stand for but how well you belittle your opponent
It's honestly not that likely. Everyone posting polls when we're not even set in stone for the election.
They keep saying Dutton will win, but Dutton will need a whhhooollee heap of seats gained to become PM. The people that say he will be PM do not prophesise which seats the LNP will gain.
@ThithLord: honestly the only reason albo has any chance at this election is because of dutton, labor should thank their lucky stars frydenberg lost his seat
@May4th: Abso-freaking-lutely. With such an incredible body of work already completed this term, Australian's have no idea about 90% of it because of the concentration of media in this country.
Someone like Dutton wouldn't have a prayer without our biased media.
Dutton offers nothing. But then again neither did Tony Abbott and he got in by repeating "stop the boats" ad nauseum, with zero media challenge on what his policies actually were. The fact he lost his own seat a few years later says it all about how good he was.
Savings accounts starting to drop
STG incentive saver 4.9% down from 5.15% - All new rates are effective 28th February 2025. - https://www.stgeorge.com.au/personal/bank-accounts/savings-a…
Ubank - No update as yet
Rabobank - No update as yet
Defence Bank - The RBA has dropped the official cash rate by 25 bps to 4.10%. We will review our interest rates along with current market conditions and will notify members of any changes in writing or via our website.
AMP - Following the RBA's cash rate decrease, we are reviewing what this means for our customers. We will make an announcement soon. Please check back here for further updates once they have been made available.
Macquarie Bank - Reviewing RBA decisionNope, inflation is another term for fiscal self control. The greater % of the public is still spending beyond their means, and businesses have all jumped on the price hike bandwagon, because they see the opening.. If we actually cut back on shit we don't NEED at this time, those ripoff merchants would play ball. We are players in the inflation game, and politicians are AH who blame each other for something consumers have the main responsibility for.
Employment is high and so is migration. That plays into the end result too, so one of those things (guess) should have been metered long ago. Full employment is not a cure all,( so why keep importing statistics?) nor is low interest rates.
Living within our means and luxuries and non essential purchasing is the enemy of inflation.People still jump on a plane to Japan, etc, and come home to bang on on FB about gummint to blame bla bla bla.The sooner we address the whole exploitation of housing by investors, the better. On that frnt the LNP has never and never will be a first home buyers friend or ally.
Duttons millionaire by real estate investment tears are all reptilian fakes.While a static population demanding more stuff can be a source of inflation, a more potent source is an increasing population who don't contribute to an increasing supply of stuff (for example uber eats 'students', and elderly foreigners). The major source however is bank lending. Every time someone takes out a mortgage or refinances, money is created from nothing and the total supply of money increases. More money chasing the same amount of stuff means stuff becomes more expensive, ie inflation. Commercial bank lending is responsible for over 90% of Australia's money supply.
Plebs have to struggle, while our leaders piss $800B (that's just a % deposit) against the wall for the pleasure of being AUKUS reamed for the rest of time, or the end of days, (whichever comes first) to be a nuclear dumping ground and playground for the rejects of US society who end up in uniforms , relocated to our backyard.Out of sight /mind. [ The other day Marles handed over a holding deposit of $800M to Trump. 2 days later he turfed tariffs on us and his mates lectured the shit out of us on aluminium exports, (most of which is via Yankee mining companies based here) The bulk of those miners profits don't reside here.]
AUKUS is beyond dead money. The "jobs,jobs,jobs' claim is the greatest ever lie in Australian political history. It makes Watergate look like like a Tupperware party. It's no coincidence Dutton visited Trump in season one and AUKUS became a thing, and not long after Scomo pissed off he scored a blank cheque job in the US weapons industry. He probably has his slimy finger prints all over the decision to send 2000LB pancake bombs to Israel yesterday
Where is 4 Corners on this scam?
You sound like an advert for DOGE…
@arkie0: It's the most DOGE-able target on earth.
Why thanks.
The most egregious wasteful,dangerous,pocket lining pox is what AUKUS is. Guaranteed Nampanjimpa-Price won't EVER poke her sticky, hypocritical, sold-out, Pinocchio nose anywhere near that existential nuclear-threat scam, when she gets the tokenistic & cushy 'diversity ' gig of going after LNP grudge sacking targets s. She is specifically being employed to eradicate the remaining voices of opposing views to hers (and Duttons) in this country. Basically to remove all dissenting voices. It's the oldest most racist recipe on the planet.The irony of selling out your own people for a xenophopic Muppet like Dutton is another scar on Australias history.TLDR You wont see our soon to be diverse female equivalent to Musk DOGE scrutinise the trillion dollar (and counting) AUKUS scam. She needs indigenous land to bury americas toxic nuclear waste.
Election soon, what a surprise. Banks will think about passing the current to consumers in about 6 months, even though they raise the rate 6 seconds after an RBA increase announcement.
What has the election got to do with anything? Unless you actually think the multi millionaires that run the RBA would be Labor voters?
LNP were desperate for no cut, purely for political reasons. Dutton has banged on about people doing it tough (he doesn't care) as a political weapon for ages and then didn't want the very thing that would help a bit because he thinks it might affect his personal ambitions.
Also most lenders announced they would pass it on the same day or the day after. Effective from late Feb or early March in most cases.
LNP were desperate for no cut, purely for political reasons
Same reasons Labor were desperate for a cut.
Effective from late Feb or early March in most cases
That's not same day.
I'll never understand why people clamour for rate cuts. It pushes inflation up, rewards those who aren't prudent with money and hurts savers.
If you have your own home, a rate cut might make your mortgage (slightly) less but it also pushes up the cost of your next home if you ever upsize or downgrade.
If you don't own your own home, a rate cut means you get less in your savings account, and you have to deal with higher inflation.
If you own an investment property, you get a 47% discount on the interest rate anyway, so it's much of a muchness.
If you're looking to buy a property soon, a rate cut means higher house prices.
So most people don't benefit from low rates.
I'd much rather have high rates and low inflation, because that framework rewards the prudent and punishes the reckless.
If you own an investment property, you get a 47% discount on the interest rate anyway, so it's much of a muchness.
What.
Interest paid is tax deductible, the poster assumes everyone is on the max tax rate. But for the average person, say 30%.
Either way, a .25% drop, after the tax saving, is fark all to the investor.
the poster assumes everyone is on the max tax rate.
This is what I had an issue with.
Hush. Your logic is not welcome here.
Agreed with all your points, rate cuts are for the stupid who fail to understand buying power.
Australians had been far 'richer' in the 70s earning 1/10th of what they do today.
I think that if you look at the impact for individuals, higher rates disproportionately hurt those who can bear it least.
E.g. Younger people with a mortgage, renters too if it flows to rent increases.Meanwhile anybody who's cashed up or owns property outright is largely unaffected and can continue spending and contributing to inflation.
Though the other part is how quickly and far they raised rates when the time came. I think they would have been better to start raising them earlier, but more slowly. So people had time to adjust.
The graph on the Finder page linked earlier shows rates went up by 4.25% in 1.5 years (including 3.5% in the first 12 months). That's pretty wild.considering where it started from though? .1%….doesn't take much to increase that. Neutral rate is somewhere between 3% and 3.5%, so we aren't that far off that anyway. Mean trimmed inflation still isn't within the band that the RBA want….which is why they were split on whether to cut or not. Personally I think they should have waited to see what is going to happen with Trumps on again/off again tariffs etc….in the end, they might have to put them up again.
Though the other part is how quickly and far they raised rates when the time came
Expand your graph out a bit more and you'll see the period you are talking about was far from 'normal' rates.
https://www.rba.gov.au/statistics/cash-rate/
Dropping rates to 0.1% was reckless by the RBA and the gov.
Increasing housing demand above supply was and still is reckless by the gov.
At the moment, the housing market is a game of musical chairs. At some point there will be either no buyers who can afford the property or no renters that can afford the rent.
Once the music stops, property owners will be in for some fun.
We already have high rates and low inflation. This was just a small cut after many increases.
Businesses won't invest unless debt is affordable and sustainable. That's how an economy grows.
We already have high rates
High compared to record lows…..
exactly! People saw low rates for years and thought that was the norm….low rates are just as bad as "high" rates. Neutral hovers around 3-3.5% anyway
CBA will cut rates starting Feb 28 , already annouced
The RBA has cut the cash rate for the first time since 2020. This might be a relief for homeowners, but is inflation really under control?
RBA are a pack of idiots…. Inflation isn't under control. We'll have a rate rise by the end of the year now.
Doubt it. The effect of rate changes take 6-12 months to be seen, I expect inflation to slowly ease into the 2-3% range despite the rise.
Time will tell. We need negative inflation to get back the 20-30% inflation we have had in the last 5 years.
Eh we had below expected inflation for 6 years prior to the recent increase, in fact our 10Y inflation mean is within bounds
You reckon house price inflation will be subdued for another 6 to 12 months?
Property price changes react slowly, but either way the RBAs role isn't to control property prices
@tenpercent: That's a very narrow view of the impact of these changes, the reality is that lower rates will have a number of impacts.
The RBA keeping rates between 2-3% is crucial for economic growth, currency strength and price stability. A cheap house is no use to us if rates are 30% and unemployment is also very high.
Should have kept them higher. Why cut rates when unemployment is still at 4.0%. At this stage you are just pumping money into the economy for no reason to stimulate something that doesn't need it.
At this stage you are just pumping money into the economy for no reason to stimulate something that doesn't need it.
Yep, just pumping the economy for no reason at all! Silly thing to do, but on right, voting day is coming up, so need some 'good news'.
But agree, you cut rates to stimulate, you increase rates to slow it down. You leave them as is if everything is ok.
While I'm not a huge fan of the RBA, I'm confident they know more than you do.
LOL Feel better after saying that? Did your day improve?
RBA are idiots, far too slow to raise rates, too fast to drop them.
RBA was sitting there doing nothing while every other country was raising rates to slow inflation, but instead we had the RBA going lalalalala
I thought these RBA meetings and announcements occurred at the first Tuesday of the month. Why has that changed?
The justification for cutting back the number of meetings is so the board can have more time to weigh up the latest economic indicators before making a monetary decision.
https://www.abc.net.au/news/2024-02-05/rba-meetings-changing…
Thank you for this information. I guess they haven't cut rates for so long I didn't even notice the change they made.
How convenient. 11 meetings a year when they were raising rates, only 8 in an easing cycle
1 hour of work per month was too much for them.
Will this result in landlords reducing rents?
Yes sirree. And a free unicorn to all the pacifists in the Israeli cabinet as well.
No. Rent is a function of supply and demand of housing, and the income of tenants. If interest rates were 0% or 20%, there are still some properties that are fully mortgaged, and some that are freely owned without debt. The rent wouldn't be different regardless of the loan status.
A better lever to control the economy would be one that can stem the flood of immigration. Those hundreds of thousands of people coming in each year live in houses/apartments.
Funny, everyone I know recieved massive rent hikes that were justified by rate increases, now that there are rate cuts suddenly it's more complicated than that. It's like arguing with the wife lol.
We have too many pensioners and retirees to support, the ratio of pensioner to worker was 1/8 in the 1970s, now it's 1/4 and growing. Poor retirement planning by an entire generation has put us in a position where we need immigration just to maintain their welfare.
And the Libs want unfettered access on super that will supercharge that stupidity.They also protect negative gearing. These fwits brag about about being good managers and the battlers mate. FFS .Sure Dutto. And i drive better pissed and blindfolded.
Rent increases were never about the rates, it is and was purely about supply demand. Not enough stock to many people bidding for the same place. if intrest rates went to 10% and there was no demand for rentals the price would drop as the equation would changes more houses then people wanting them. But until both governments stop the mass influx of people into Australia you can expect rents to keep increasing.
@tomfool: Immigration is a red-herring you've been fed to avoid looking down the aisle, each immigrant consumes less housing and other resources than they provide.
It's like saying a business could save money by laying off their entire sales team, when each employee earns the business 2x what they take home.
The actual tax revenue surplus from each immigrant means that the government could promise to build at least 2 new houses for every immigrant they allow in.
They've convinced you that the people giving more than they take are the problem, not those who squander that more.
This stuff actually does make a difference to people.