Interest rates are constantly changing, it’s in their nature. It’s important to know what the various interest rates are for any kind of loan you might be thinking of taking out. So, what are the current interest rates in Australia? Let’s focus on the cash rate, home loan rates, savings account rates, and current term deposit rates.
The Cash Rate
The cash rate is Australia’s official interest rate that is set by the Reserve Bank of Australia. This is the rate that is charged on loans handed out by financial institutions like banks. Historically, the RBA’s cash rate has always been high but has as recently as 2012 been steadily dropping.
Currently, the RBA’s cash rate is at a historic low of 0.1%. This, in part, has been one of the main driving forces behind the recent property market boom. A low cash rate means low rates of interest for borrowers. The cash rate is one of the most important current interest rates in Australia for 2021. Be familiar with it.
The Current Home Loan Interest Rate
These are tied very closely with the cash rate as the lower the cash rate, the lower the interest rate on your home loan. This happens not because the lenders absolutely have to match it, but because they want to remain competitive. Lenders will fight incredibly hard in order to provide the most competitive rates on the market. Knowing the cash rate and then shopping around for the best current home loan interest rate is a good way to ensure you’re getting the best deal.
Considering that your home loan is likely the most expensive thing you ever do in your life, it’s important to understand it. If you just go for the first home loan rate you see, you might end up paying hundreds of thousands of dollars on top of your mortgage. For those new to this and wish to expand their knowledge, we have a free First Home Buyer’s Guide to assist you.
Current Savings Account Interest Rates
Most people have two accounts, a spending account in which to make purchases with, and a savings account that earns interest over time. It isn’t one of the most important or dramatic of the current interest rates in Australia, but it can help you earn a little more cash.
For example, if you have a deposit of $10,000 in your savings account if the interest rate was 2% per annum, then by the end of the year you will have an extra $200. It’s nothing crazy but it is more money than you would have otherwise, though a 2% interest rate would be almost impossible to find.
Savings account interest rates are currently also experiencing a historic low thanks to the cash rate. The highest you’ll be able to get currently is around 1% p.a, but the average rate one of the Big Four banks is closer to 0.5% p.a.
Current Term Deposit Interest Rates
Term deposits are very similar to savings accounts but cannot be withdrawn at any time like a savings account. For current term deposits, the current interest rate is fixed for the whole term of the loan a little like a fixed-term home loan. It isn’t the most dynamic of the current interest rates in Australia, but it is helpful to know.
These typically offer similar rates to savings account interest rates due to their close link to the RBA’s cash rate. At the Big Four banks, the typical interest rate you’ll find is just 0.3% p.a. but the broader market isn’t much better. The average rate you can find is still just 0.5% p.a.
Well, there you have it, these are the current interest rates in Australia for 2021 and what they mean for you. If you need any assistance check out our guides and if you’re interested in taking out a loan, feel free to contact us.