Two years since last RBA rate change after August 2018 board meeting decision

The decision to keep the official interest rate on hold today marked the two year anniversary of the last change to the cash rate by the RBA.

It is the longest period of interest rate stability on record. 

CoreLogic head of research Tim Lawless provides his advance commented that the steady rate setting had a lot to do with stubbornly low inflation, record high household debt, a slack labour market and, more recently, falling dwelling values. 

Tim Lawless suggested financial markets continue to expect that the cash rate will remain unchanged until at least 2020.  

He noted while the cash rate has remained stable, mortgage rates have been tweaked, the extent to which depends on the borrower type and loan product.

"Over the same period of cash rate stability, the average standard variable mortgage rate has actually reduced by 5 basis points for owner occupiers and increased by 30 basis points for investors."

Three years fixed rates for investors have increased by ten basis points and discounted variable rates are up 40 basis points for investment loans.  

Meanwhile two of the big four banks, Commonwealth Bank and ANZ, along with 19 other lenders, have slashed interest rates on fixed home loans as competition among lenders heats up.

RateCity.com.au shows lenders have dropped fixed interest rates by up to 72 basis points on more than 120 products. Commonwealth Bank cut its fixed rates by 10 basis points, while ANZ cut some of its fixed rates up to 24 basis points.

1300HomeLoan Managing Director John Kolenda said it looks unlikely the RBA will make any change over the next 12 months.

“The circumstances which have prompted the RBA to stay on the interest rate sidelines for a record breaking two years see no signs of change,” Mr Kolenda said.