Current Interest rates in Australia

RBA Cash Rate Target: 3.85%

Brooke Cooper

RBA Cash Rate News & Guides

Last cash rate cut: 25bp in May

While the RBA has held steady since May, the last rate cut continues to influence lending markets, as well as consumer and property market sentiment.

The RBA board announced a 25 basis point cut on Tuesday 20 May, bringing the cash rate to 3.85%.

"Data on inflation for the March quarter provided further evidence that inflation continues to ease," its post-meeting statement read.

"With inflation expected to remain around target, the Board therefore judged that an easing in monetary policy at this meeting was appropriate."

The cut marked the second reduction of the current cash rate cycle – one that's expected to be a drawn-out easing cycle.

May fallout: When did your lender move?

✅ Passed on full 0.25% cut?

Yes

📆 Days taken to announce

Immediate (announced 20 May)

⏳ Days taken to implement

10 days (effective 30 May)

🏠 Loans affected

Variable rate home loans

Find out more: CommBank slashes home loan interest rates in wake of RBA cut

✅ Passed on full 0.25% cut?

Yes

📆 Days taken to announce

Immediate (announced 20 May)

⏳ Days taken to implement

14 days (effective 3 June)

🏠 Loans affected

Variable rate home loans

Find out more: Westpac cuts home loan interest rates following RBA move

✅ Passed on full 0.25% cut?

Yes

📆 Days taken to announce

Immediate (announced 20 May)

⏳ Days taken to implement

10 days (effective 30 May)

🏠 Loans affected

Variable rate home loans

Find out more: NAB cuts home loan interest rates following RBA decision

✅ Passed on full 0.25% cut?

Yes

📆 Days taken to announce

Immediate (announced 20 May)

⏳ Days taken to implement

10 days (effective 30 May)

🏠 Loans affected

Variable rate home loans

Find out more: ANZ to cut variable home loan rates following RBA decision

Other lenders

Lender

Full Cut Passed?

Days to Announce

Days to Implement

Macquarie Bank

✅ Yes

Within hours

3

Unloan

✅ Yes

Within hours

Immediately (at least for new customers)

ubank

✅ Yes

1

9

Firstmac

✅ Yes

2

14

loans.com.au

✅ Yes

2

14

Fastest mover: Athena Home Loans

Athena was by far the first to implement the February rate cut - moving within hours of the RBA's decision.

✅ Passed on cut?

Yes - full 0.25%

📆 Announcement

Within hours (same day)

⏳ Time to implement

Immediate

🏠 Loans affected

All variable rate customers

Athena has a history of passing on cash rate cuts the same day they're announced.

Held Back: None

None of the lenders in our review did not pass on the May rate cut.

Was your bank slow to pass on the cut? If so, it could be a sign that it might be time to refinance. Check out these top rates available now:

Update resultsUpdate
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees Max LVR Lump Sum Repayment Extra Repayments Split Loan Option TagsFeaturesLinkComparePromoted ProductDisclosure
5.54% p.a.
5.58% p.a.
$2,852
Principal & Interest
Variable
$0
$530
90%
  • Owner Occupier
  • Variable
  • Principal & Interest
  • 10% Min Deposit
  • Redraw
  • Extra Repayments
  • More details
  • Available for purchase or refinance, min 10% deposit needed to qualify.
  • No application, ongoing monthly or annual fees.
  • Dedicated loan specialist throughout the loan application.
Disclosure
5.49% p.a.
5.40% p.a.
$2,836
Principal & Interest
Variable
$0
$0
80%
  • Built and funded by CommBank
  • Owner Occupier
  • Variable
  • Principal & Interest
  • 20% Min Deposit
  • Redraw
  • More details
  • A low-rate variable home loan from a 100% online lender.
  • Backed by the Commonwealth Bank.
Disclosure
5.64% p.a.
5.68% p.a.
$2,883
Principal & Interest
Variable
$0
$530
90%
  • Owner Occupier
  • Variable
  • Principal & Interest
  • 10% Min Deposit
  • Offset
  • Redraw
  • Extra Repayments
  • More details
  • Available for purchase or refinance, min 10% deposit needed to qualify.
  • No application, ongoing monthly or annual fees.
  • Quick and easy online application process.
Disclosure
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 .

Important Information and Comparison Rate Warning

Cash rate tracker: What's next for the RBA?

With the May decision behind us, economists remain divided on the pace of further easing.

As of 25 June, those at Westpac and ANZ are predicting the board will hold the cash rate at its June meeting. CommBank and NAB, on the other hand, forecast a July cut – bringing the cash rate to 3.60%.

Outcome of RBA meetings in 2025:

Meeting Date

Decision

Cash rate

17–18 Feb

-0.25%

4.10%

31 Mar–1 Apr

Hold

4.10%

19–20 May

-0.25%

3.85%

7–8 July

TBD

???

11–12 Aug

TBD

???

29–30 Sep

TBD

???

3–4 Nov

TBD

???

8–9 Dec

TBD

???

What is the RBA cash rate?

The Reserve Bank of Australia’s (RBA’s) overnight cash rate target (often simply called the cash rate) influences many things. Though, home loan holders are likely most concerned with how it impacts interest rates.

The RBA cash rate determines how much lenders need to pay to borrow money. The higher the cash rate, the more expensive it is for a bank to operate day-to-day.

Therefore, when the cash rate is high, so to will be the interest rates that banks and lenders charge to borrowers and provide to depositors. After all, banks and lenders want to protect their bottom line, just like the rest of us.

As of 20 May, the cash rate is 3.85%, having been cut from its recent high of 4.35%.

The below chart shows how the cash rate has moved in recent times:

Why do we need a cash rate?

The cash rate serves as a crucial tool in managing the economy.

By adjusting the cash rate, the RBA can influence economic activity, control inflation, and ensure financial stability.

When the economy is overheating and inflation – that is, the price of goods and services – is rising too quickly, the RBA might increase the cash rate to make borrowing more expensive. That, in turn, can be expected to cool down spending and investment.

On the other hand, when the economy is sluggish and growth is subdued, a lower cash rate can stimulate it by making borrowing cheaper and encouraging spending.

Essentially, the cash rate acts as a lever to balance economic growth and maintain a healthy financial system.

However, the cash rate is not without its faults. It is often described as a 'blunt tool' because changes to the rate ripple across the entire economy, impacting far more than just the intended targets.

Why does the RBA cash rate impact home loan interest rates?

To explain how the RBA cash rate influences home loan interest rates, we need to start with how banks manage their money.

Regulations demand that banks maintain a certain level of liquidity at the end of each day. This means they must have a certain amount of cash on hand.

Cash deposits – such as those in savings accounts and term deposits – count towards a bank’s liquidity, while funds lent to borrowers reduce its liquidity.

If a bank disburses more funds through loans and deposit withdrawals within a single day than it receives in new deposits and loan repayments, it might struggle to meet its liquidity requirements.

That’s when the cash rate comes in. A bank can choose to borrow the necessary funds overnight to meet its liquidity needs, and it will be charged the overnight cash rate set by the RBA.

For that reason, when the cash rate is high, so is the cost of doing business for banks. When the cost of doing business is high, banks increase interest rates charged to borrowers to recoup their higher costs.

However, the cash rate isn’t the only factor that impacts home loan interest rates. Sometimes, lenders will adjust their home loan interest rates even if there has been no change in the cash rate. These ‘out of cycle’ home loan rate changes happen frequently.

Your Mortgage is one of Australia’s leading home loan information and comparison websites.

Our mission is to educate Australians about all things home loans through fresh, engaging, and accurate news, guides, and exclusive research. We aim to empower homeowners, aspiring buyers, and property investors to better understand – and improve – their financial position.

Editor of Your Mortgage

Brooke Cooper is the Editor of Your Mortgage, having joined the team in 2023 after spending years analysing the Australian finance and wealth landscape at the Motley Fool. She leads a dedicated team of journalists, all passionate about educating current and aspiring homeowners on everything money and mortgages.

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