The RBA cash rate explained: How it affects you
Learn how the Reserve Bank of Australia’s cash rate influences your mortgage repayments. Discover why it matters and what it means for your financial situation.
The Reserve Bank of Australia (RBA) takes charge of making monetary policy and maintaining strength in the financial institutions in Australia. Australia's central bank meets throughout the year to discuss economic growth indicators that influence the banking system in the Australian economy - one of these is the ‘official cash rate’.
What is the official cash rate?
The official cash rate is Australia's official interest rate charged on unsecured overnight loans between banks. In simple terms, it's how much it costs banks to borrow from each other.
When does the RBA meet?
The RBA’s board meets eight times a year, roughly every six weeks and over two days, with a decision announced on the second day (always a Tuesday) at 2:30pm (AEST/AEDT). The decision is published on the RBA website and the full board schedule can be accessed.
Why does the RBA change the cash rate?
At each meeting, the RBA decides if they should adjust the cash rate to maintain economic stability and control inflation, aiming to keep it within a target range of 2-3%. When inflation rises above this target range, the RBA may decide to lift the cash rate to slow down spending. Higher interest rates make it more expensive to borrow, which lowers demand for goods and services. This helps ease price growth and brings inflation back to target.
When inflation is below the target range or the economy is slowing down, the RBA may decide to lower the cash rate to encourage borrowing and spending, stimulating economic growth.
Why does a RBA cash rate increase affect my interest rate?
The RBA’s decision to increase the official cash rate makes it more expensive for lenders to borrow money – a key consideration for how lenders price their loans. Learn more about how interest rates are determined.
What does Unloan do when the cash rate changes?
When the RBA decides that the cash rate decreases or increases Unloan reviews the impact on our Live-In and Invest interest rates. We’ll communicate any changes to our own interest rates that could impact your monthly repayments on our website and directly to you via email.
We remain committed to providing Australians with a low rate home loan and provide all of customers with a 0.01% p.a. Loyalty Discount, irrespective of any RBA decision, which means our home loan gets better and better each year. Learn more about our award winning value.
This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Please consider seeking financial advice before making any decision based on this information.
Unloan is a division of Commonwealth Bank of Australia.
Applications are subject to credit approval, satisfactory security and you must have a minimum 20% equity in the property. Minimum loan amount $10,000, maximum loan amount $10,000,000, and total borrowings per customer across all Unloan loans is $10,000,000. (For purchase loans a minimum 10% equity is required - however a Lenders Mortgage Insurance (LMI) premium and higher interest rate apply. In some cases, depending on the property’s location or type, an LMI premium may also be required for LVR between 70.01% to 80%). For loans with Lenders Mortgage Insurance (LMI) the minimum loan amount is $10,000, maximum loan amount is $3,000,000 and total borrowings per customer across all Unloan loans is limited to $3,000,000).
Unloan offers a 0.01% per annum discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The discount is applied for each loan you have with Unloan.
*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. In certain circumstances you may be required to pay a Lenders Mortgage Insurance (LMI) premium. Learn more about why this is applied and how it works. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.
