The Reserve Bank of Australia (RBA) has decided to keep interest rates on hold, disappointing current homeowners and property investors who have been the biggest beneficiaries of dropping rates over the past few months.

So far, the RBA has made 5 interest rate cuts since September, bringing the cash rate to its lowest in 45 years, but extra rate cuts are anticipated in the coming months. At the moment, the RBA has indicated it plans to keep the interest rate at 3.25 per cent, preferring to watch what the economy will look like in the coming months.

What does this mean for the average person with a home loan?

At the moment, the RBA is simply keeping things steady when it comes to the Australian economy. And although variable rate home loan owners would prefer another rate cut, those with a fixed rate home loan will be delighted that rates have not plummeted again since they locked in their loan.

If you have a variable rate home loan, your rate relies on the interest rate that the RBA determines. Banks will lower or increase your variable interest rate according to what the RBA is doing. So in our current situation, since interest rates are extremely low, your variable interest rate will also be a record low for now– which is excellent news. Take advantage of the situation and make higher repayments on your mortgage, refinance your home loan, or if you're in a lucky financial position, try and pay it all off!

Coupled with the government homebuyer boost, which is an amount of $7000, the current low interest rates are an especially positive move for first homebuyers or new property investors.

On the other hand, for those who have opted for a fixed rate home loan, you won't get to enjoy the benefits of a low interest rate because your rate is a fixed amount determined by the financial institution when you initially applied for the loan.
Why are the experts advising not to lock in your home loans?

For first homebuyers and novice property investors, experts are recommending that with rates at an all time low it may be an opportune time to have a fixed interest rate on some, or, all, of your home loan. However, understand that some experts are predicting more rate cuts later in the year.

A smart way to beat the unpredictability of the market is to split your mortgage into a fixed and variable rate loan. This means you'll get to benefit from the current low interest rates from the variable rate without sacrificing on the stability of a fixed rate home loan in case circumstances change over time.

This article was brought to you by Mozo.com.au – March Reserve Bank Interest Rate Announcements .