If you have a variable-rate home loan, you've probably heard the phrase "the RBA held rates" or "the RBA cut the cash rate" on the news — and wondered exactly what it means for your monthly repayment. Here's the plain-English version.
What is the cash rate?
The cash rate is the interest rate the Reserve Bank of Australia (RBA) sets for overnight loans between banks. It's the RBA's main lever for managing inflation and economic growth. The RBA board meets regularly through the year to review the rate and decide whether to hold, raise or cut it.
How it flows through to your mortgage
When the cash rate moves, banks generally adjust their variable home loan rates in response — though not always by the same amount, and not always immediately. A cash rate cut doesn't automatically mean every lender passes it on in full, which is one reason it pays to have a broker watching the market on your behalf.
What this means if you're on a fixed rate
Fixed-rate loans aren't affected by cash rate changes during the fixed period — but if your fixed term is ending soon, the rate you roll onto will reflect current market conditions. It's worth reviewing your options a few months before your fixed period expires.
What you can do about it
- Use our loan repayment calculator to see how a rate change affects your repayments.
- Check whether your current lender is still competitive — refinancing is often simpler than people expect.
- If you're on a fixed rate ending soon, start the conversation early rather than waiting for the rollover date.
Rate movements can feel out of your control, but how your loan is structured isn't. If you'd like a second opinion on where your rate sits in today's market, get in touch for an obligation-free review.