What is the RBA Cash Rate?

In the simplest terms, the RBA cash rate is Australia’s official interest rate, which was recently lifted to 4.35% as of November 2023. In Australia, the Reserve Bank influences the cash rate by increasing or decreasing the cash rate target generally in increments of 0.25%.

In more complex terms, the cash rate reflects the market interest rate on unsecured ‘overnight' funds, which are the funds banks lend each other. The cash rate serves as a benchmark for everything from mortgage interest rates, to savings account rates, term deposit rates and the exchange rate.

The cash rate is determined by the RBA in a board meeting every month (excluding January). When the RBA makes changes to the cash rate, it has a significant knock-on impact on all other parts of the economy and the price of financial products.

Historically, a high RBA cash rate has resulted in higher interest rates on everything from home loans to savings accounts, term deposits, car loans, personal loans and so on. A low cash rate generally results in lower interest rates on these financial products.

The current cash rate is 4.35%.

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RBA Cash Rate History

How does the RBA Cash Rate affect Home Loan Interest Rates?

The cash rate is one of the main factors that lenders take into account when setting their interest rates, so any hikes or cuts to the cash rate eventually flow through to borrowers.

While home loan interest rates are closely tied to the cash rate, they aren’t the only factor. Sometimes, lenders will increase or decrease their home loan interest rate even if there has been no change in the cash rate. These ‘out of cycle’ home loan rate changes happen all the time.

What happens to home loan rates when the cash rate decreases?

When the cash rate decreases, the lower home loan rates will go as lenders battle to remain competitive. This has been the case over the last few years, where home loan interest rates have sat around the 2-3% mark with a historically low cash rate of 0.10%.

However, in the case of a cut lenders aren’t obligated to pass it on to their customers in full. We saw this during the cash rate cuts in 2020 where some lenders only passed on partial cuts (or none at all), or only reduced fixed rates.

Even a small decrease in home loan interest rates can translate to a decent reduction in monthly mortgage repayments, which makes taking out a home loan more attractive. This can result in a rush to enter the property market, which drives property prices up.

What about when it increases?

When the official cash rate increases, lenders generally pass it on in full which means home loan interest rates (and mortgage repayments) increase. A rate increase hasn’t happened since 2010, but it’s widely predicted by economists that the cash rate will begin increasing in 2022.

There’s concern among experts that borrowers, particularly those that have bought within the last two years when interest rates were at their lowest, could be in for a shock when interest rates start rising.

What are the current home loan interest rates?

Update resultsUpdate
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.04% p.a.
6.06% p.a.
$2,408
Principal & Interest
Variable
$0
$530
70%
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5.99% p.a.
5.90% p.a.
$2,396
Principal & Interest
Variable
$0
$0
80%
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5.94% p.a.
5.95% p.a.
$2,383
Principal & Interest
Variable
$0
$0
90%
5.99% p.a.
5.99% p.a.
$2,396
Principal & Interest
Variable
$0
$150
60%
6.04% p.a.
6.06% p.a.
$2,408
Principal & Interest
Variable
$0
$530
90%
4.5 STAR CUSTOMER RATINGS
  • Low rates for purchase and refinancing
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6.14% p.a.
6.17% p.a.
$2,434
Principal & Interest
Variable
$0
$445
60%
6.04% p.a.
7.15% p.a.
$2,013
Interest-only
Fixed
$0
$180
90%
6.09% p.a.
6.11% p.a.
$2,421
Principal & Interest
Variable
$0
$250
60%
6.09% p.a.
6.35% p.a.
$2,421
Principal & Interest
Fixed
$6
$799
80%
6.14% p.a.
6.15% p.a.
$2,434
Principal & Interest
Variable
$0
$0
80%
6.19% p.a.
6.44% p.a.
$2,447
Principal & Interest
Variable
$248
$350
80%
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6.30% p.a.
6.58% p.a.
$2,476
Principal & Interest
Variable
$0
$791
95%
6.59% p.a.
7.36% p.a.
$2,552
Principal & Interest
Fixed
$8
$0
70%
6.74% p.a.
7.37% p.a.
$2,592
Principal & Interest
Fixed
$0
$160
90%
6.84% p.a.
7.16% p.a.
$2,726
Principal & Interest
Variable
$0
$0
95%
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Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of .



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