A look back in time: how the cash rate has moved over the past 10 years
With only two reductions in the official cash rate (OCR) for nearly two years, it’s hard to remember a time where the OCR was anything but at a record low. We decided to take a look back over the years to see how the cash rate has changed over the past decade.
2004 - a year of stability, there was no movement in the official cash rate in 2004, and it remained unchanged at 5.25 per cent for the whole year.
2005 - a single rate rise of 25 basis points in March 2005 saw the OCR increase from 5.25 to 5.50 per cent.
2006 - there were rate rises in May, August and September of 25 basis points each - taking the OCR from 5.50 to 6.25 per cent.
2007 - a relatively stable year with just two 25 basis point rate rises (in August and November) taking the OCR from 6.25 to 6.75 per cent.
2008 - a year of fluctuation saw a cash rate increase to 7.25 per cent in the first half of the year and drop to 4.25 by the end of the year.
2009 - the first half of the year saw a rate cut of a full per cent in February, and another of 25 basis points in April lowering the OCR to 3.0 per cent. The second half of 2009 saw three consecutive rate rises of 25 basis points each increasing the cash rate to 3.75 per cent.
2010 - we saw four rate rises of 25 basis points each in 2010 (March, April, May and November), taking the OCR from 3.75 to 4.75 per cent.
2011 - the cash rate remained stable at 4.75 per cent for most of 2011, until we saw consecutive rate cuts in November and December by 25 basis points each, bringing the OCR to 4.25 per cent.
2012 - in May the OCR dropped by 50 basis points and there were three 25 basis point cuts in June, October and December, taking the official cash rate from 4.25 per cent to 3.0 per cent.
2013 - the RBA lowered the cash rate twice - in May and August - taking the cash rate from 3.0 per cent to 2.5 per cent, where it stayed until February 2015.
It’s interesting to see how the cash rate can drop and rise significantly within a relatively short period of time. It’s a reminder to us all that cash rate movements can happen quickly and it’s our responsibility to make sure our clients are prepared in the event of a cash rate rise.
As always, I’m here to give a home loan health check to any of your clients who need it.