Finance experts expect no RBA interest rate moves until 2017

AUSSIES can expect to see no RBA cash rate moves until 2017, helping borrowers cull debt while doing little for savers. But hot deals are still up for grabs.

AUSTRALIANS should expect to see no cash rate moves until 2017 which will help borrowers cull debt but do little for savers.

The Reserve Bank of Australia today meets for the final time this year and ING Direct’s treasurer Michael Witts said households carrying debt should expect “365 days of Christmas” with no cash rate tipped anytime soon.

“There will be most probably be no movement,’’ he said for 2017.

“They (the RBA) have just about pushed interest rates as far as they can and there’s pretty much no petrol left in the tank in terms of interest rate movements.”

RELATED: Find a competitive home loan interest rate

The RBA has dropped the cash rate twice this year by 25 basis points at a time in February and May and it is unlikely Governor Glenn Stevens will make any change today.

Just last week he announced that he wasn’t ruling out cutting the cash rate again but said he would “chill out” until the bank’s first board meeting in 2016 which is held in February.

Seize the moment ... Borrowers should be working to scale ahead of their home loans while interest rates remain at historical lows.

Data from financial comparison website Mozo shows there are still some hot deals available on available on both fixed and variable loans, some below the four per cent mark.

The average standard variable rate is 5.16 per cent and the monthly repayments are $1640 on a $300,000 30-year loan.

The average three-year fixed loan is 4.33 per cent and the monthly repayments are $1490.

But on both loans types the best offer available is the same at 3.89 per cent and the monthly repayments are $1413.

Borrowers are being urged to pay as much extra as they can on their loans while rates remain so low.

Mozo spokeswoman Kirsty Lamont said the nation should expect to see “a fairly long period of stability” ahead on the rates front and said borrowers could optimise this by making some significant savings.

On the look-out ... Financial comparison website Mozo's spokeswoman Kirsty Lamont said there are some good deals out there to help borrowers save on their home loans.

“There’s a huge 1.27 per cent difference between the average standard variable rate and the lowest variable rate on the market,’’ she said.

“If your lender it not competitive, refinance your loan but keep repayments the same to pay off your mortgage years earlier.”

But she said one of the biggest traps to avoid was redrawing money back out of your mortgage.

“Avoid the temptation of redrawing on your home loan to finance luxuries like overseas holidays,’’ Ms Lamont said.

“It’s okay to redraw for worthwhile investments like renovations that will add value to your property, but if you’re piling extra debt onto your mortgage for no good reason you’re likely to regret it when rates go back up.”

Mr Witts said many older savers who rely on fixed incomes were the ones that would hurt the most.

Tight hold on cash ... Retirement nest eggs are giving less income. Picture: iStock.

“Term deposit rates are 50 basis points lower than where they were last year, so their retirement nest egg is giving them less income, ’’ he said.

St George Banking Group’s chief economist Hans Kunnen also expected “there will be no cuts and no rises” next year.

“While the economy is not booming, neither is it struggling, it’s ticking along and that’s OK,’’ he said.

“When you get to super low interest rates which is what we are in a historical sense you have to mount a strong case for cutting.”

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Originally published as Finance experts expect no RBA interest rate moves until 2017