No sign of interest rate rises – but that could be bad news for FiftyUps
If you didn’t know any better, you’d assume from the blanket coverage of interest rate movements that everybody in the country has a mortgage and we’re all desperate for rates to go down, down, down.
But the reality is that about one-third of Australians – many of them FiftyUps – have paid off their mortgage. If that’s you, you may be more likely to want rates to rise, so that your savings will work harder for you.
So this week’s news was not good for many FiftyUps. The Reserve Bank of Australia released the minutes from its July board meeting on Tuesday and there’s no interest rate rise within sight:
“With the significant degree of monetary stimulus already in place to support economic activity, the Board judged that, on present indications, the most prudent course was likely to be a period of stability in interest rates,” the minutes said.
Commentators noted that was slightly stronger than the language in June, and the market is even rating the chance of a further rate cut this year at 50%.
Westpac’s chief economist is even saying that rates could remain on hold for another year.
Savers have been going backwards for some time already.
In fact, “banks have been gradually winding back the interest rates paid to savers since the start of the year as the war for deposits comes to an end”, as this story notes.
Average one-year term deposit rates fell from 3.55% to 3.48% this month – down from the returns of around 5% a couple of years ago.
