Media Release

Cash rate predictions look promising for first home buyers

  • The Biggest Reserve Bank survey by suggests cash rate will hold until next year.
  • March saw highest number of first home buyers this year.
  • Now is the time for first home buyers to save before window of opportunity closes.

MAY 31, 2014, SYDNEY - The nation’s biggest monthly Reserve bank survey conducted by one of Australia’s biggest comparison websites, has revealed that the cash rate expectation is providing the perfect time for first home buyers to enter the market.

All 16 leading economists and money experts in the survey are expecting no cash rate change at the Reserve Bank's June 3 board meeting, while the respondents are divided on when the cash rate will rise.

More than half of the economists and experts in the survey (nine of the 16 from AMP, ANZ, Bank of Sydney, ING Direct, RAMS, UBS, Heritage Bank, Moody’s Analytics and ME Bank) are forecasting the cash rate will rise next year. Five respondents from Commonwealth Bank, Commsec, Urbis, HSBC and St George Bank expect to see a cash rate rise this year.

Ten of the 16 experts suggested the public’s reaction to federal budget cuts will delay the change in cash rate, with nine stating the economy still has to grow in stability before any significant cash rate changes occur.

Michelle Hutchison, Money Expert at, said now is the time for prospective first home buyers to hit the market while interest rates are low.

"With our latest Reserve Bank survey showing that interest rates will probably rise within the next year, the window of opportunity for first home buyers to get a head start on the property ladder is closing.

"First home buyers can take advantage of low interest rates if they are ready to buy, with a decent deposit saved. The first year of buying a home loan is usually the toughest financially, so we're expecting more first home buyers to jump on the property ladder this year." analysis of Australian Bureau of Statistics (ABS) data shows that the decline in first home buyers has halted, and the number of first home buyers is at the highest level this year with 6,551 fist home buyer loans financed in March 2014.

After almost one in five home loans financed were first home buyers in September 2012, the numbers dwindled down to about 13 percent of all loans financed in September 2013 – the lowest trough on record. However, the proportion of first home buyers has remained at a steady 13 percent since September 2013.
first home buyers proportion

"With variable home loan interest rates as low as 4.54 percent, the cash rate is clearly supporting those Australians who want to get into the market," said Mrs Hutchison.

"If you're paying about $420 per week in rent, you could potentially afford to borrow a $300,000 mortgage, even at the current average variable rate of 5.39 percent.

"If you have a deposit of at least 5 percent and can factor in a buffer for when interest rates rise, it's worth comparing home loans and consider buying your first home this year."

What the survey of leading economists and money experts had to say...

Economist/expert, organisation Snap shot of comments
Shane Oliver, AMP “...Nothing's really happened. The Reserve Bank has cut interest rates to these record lows, and that has had an impact on the economy...”
Warren Hogan, ANZ “...There’s no inflation pressure on the economy just yet so they can keep the rates low, and there's no need to cut them...”
John Symond, Aussie "...We don't think there will be a change to rates, as the economy continues to send out mixed signals..."
Steven Pambris, Bank of Sydney “...The current record low interest rates will have to continue for some time...”
Michael Blythe, CBA “...What will be interesting to see is how the budget's reception will impact household consumption...”
Craig James, Commsec “...There's been a lot of huffing and puffing about the budget, but really it's people's perception. There's no reason for the reserve Bank to be cutting rates...”
Paul Williams, Heritage Bank “...The rba will be keeping an eye on the trends in unemployment, developments in key offshore economies, inflation levels and rising tensions in south east asia and europe...”
Paul Bloxham, HSBC “...The economy is showing signs of rebalancing but inflation is fairly contained at this stage...”
Michael Witts, ING Direct “...Although consumers appear to reacted adversely to the measures announced in the budget it is too early tell what the lasting impact will be...”“...Although consumers appear to reacted adversely to the measures announced in the budget it is too early tell what the lasting impact will be...”
John Caelli, ME Bank “...Inflation is within the target zone so the RBA can afford to wait and see the recovery unfold…”
Glenn Levine, Moody’s
“...The RBA will leave interest rates on hold, but this competing dynamic between a below-trend economy and a warming housing market will shape monetary policy in the next 12 months...”"
Jonathan Chancellor, Property Observer “...Other than the post-budget consumer blues, there's little reason for the RBA board to do anything but issues their monthly minutes this June...”
Nathan McMullen, RAMS “...Monetary policy settings remain mildly expansionary relative to long run averages and are appropriate given the current outlook...”
Hans Kunnen, St. George Bank “...The economic recovery isn't deep enough for them to be raising money this soon...”
Scott Haslem, UBS “...It's pretty clear the RBA is expecting the economy to only slowly improve over the next couple of years...”
Nicki Hutley, Urbis “...Consumers opened their wallets a little wider in the first few months of the year and the housing cycle is in full swing...”, ordered alphabetically by company name
For detailed comments from the survey please click here (full comments will be live on Friday May 30, 2014)

official cash rate

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The information in this release is accurate as of the date published, but rates, fees and other product features may have changed. Please see updated product information on's review pages for the current correct values.

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