Most media outlets have already informed you about the RBA’s decision to keep the cash rate on hold, however, very few of these media groups dig any deeper than the headline.

Our aim is to let you know how each RBA decision impacts on “your” mortgage and the choices that you can make.

The first point we can make about this latest decision is that the 2.50% cash rate is now into its 10th consecutive month. This is an unprecedented stretch at a record low rate. The ASX Futures market is predicting a lot more of the same (see below). In fact, the prediction is for 12 more months at 2.50%.

ASX-Yield-Curve-May-2014

The following chart gives us a historical perspective. As you can see, the three year fixed rate is at a significantly low point.

Ave-Interest-rate-comparison-May-2014

What this chart does not show is the competition that is raging outside the major banks. Whilst the average three year fixed rate on the above chart is 5.05% p.a. (for the major banks), one of our lenders is currently offering an incredibly low 4.69% p.a. Another non major is offering 4.89% p.a., 3 year fixed, with a 100% offset account.

Michael Daniels, B.Com
Smartline Personal Mortgage Advisers
State Manager NSW & ACT