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RBA’s March cash rate decision is good news for borrowers


The cash rate stays at 0.10% as predicted, but some lenders are moving rates upward regardless.

The Reserve Bank of Australia (RBA) is keeping the cash rate on hold for another month. This move was predicted by 100% of the experts in Finder's RBA cash rate survey, despite widespread speculation that interest rates will rise soon.

For home loan borrowers, a hold on the cash rate means, in theory, that the rate on their home loans won't change. The cash rate determines the short-term cost of Australian banks borrowing money from each other, and has a direct effect on how lenders determine their rates on variable home loans.

In short, a hold means rates stay low, and when the RBA does move rates up, it will almost certainly mean higher rates for borrowers. At 0.10% there's really no room for the cash rate to go lower, and no expert expects rates to get lower than they are now for any reason.

76% of the experts in Finder's survey expect a cash rate rise sometime this year. But only 16% think the rate rise will come in the first half of the year.

The only way is up, and many lenders are lifting rates anyway without the RBA's assistance. According to Finder's home loan database a total of 1,281 home loan interest rates moved upward in the last 2 weeks. These were almost entirely fixed rate home loans. Only 103 rates fell during the same time period.

If you're a borrower on a fixed rate home loan, you don't need to worry about rate rises for now. If your loan has a variable rate, today's decision is good news. But rates are creeping up, so it's worth checking to see if your lender has sneakily lifted your interest rate. It can happen, because lenders make their own decisions about rates.

And if you're worried about future rate rises, now is the time to start building up a savings buffer for when rates do rise. If your loan has an offset account, putting any cash there gives you a buffer and helps you pay less interest.

The Reserve Bank board is scheduled to meet again on 5 April to make its next decision about whether to hold or lift the cash rate.

Need a home loan? Check out some of the market's lowest rates.

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