RBA Interest Rate Decisions: What They Mean for Your Mortgage

How the RBA Cash Rate Works

The Reserve Bank of Australia (RBA) sets the official cash rate — the rate at which banks borrow money overnight from each other. This rate flows through to the interest rates banks charge on home loans, savings accounts, and other financial products.

When the RBA raises the cash rate, banks typically pass on the increase to borrowers. When it cuts the rate, borrowers should see their repayments decrease.

Current Cash Rate

As of early 2026, the RBA cash rate sits at 4.10% after a series of rate rises through 2023-2024 designed to combat inflation. The market is expecting potential rate cuts in 2026 as inflation moderates.

How Rate Changes Affect Your Repayments

Here's how a 0.25% rate change affects monthly repayments on common loan sizes:

• $400,000 loan: ±$63 per month
• $500,000 loan: ±$79 per month
• $600,000 loan: ±$95 per month
• $700,000 loan: ±$110 per month

Over a full year, a 0.25% increase on a $500,000 loan adds nearly $950 to your repayments.

Fixed vs Variable: Which Is Better?

This depends on where you think rates are heading:

• Fix your rate if you think rates will rise — you lock in today's rate for 1-5 years
• Stay variable if you think rates will fall — you'll benefit from each rate cut
• Split your loan — fix a portion for certainty and keep the rest variable for flexibility

What to Do When Rates Rise

1. Don't panic: Rate rises are usually gradual (0.25% at a time)
2. Review your budget: Identify areas where you can reduce spending
3. Consider refinancing: Your current lender may not be offering the best rate anymore
4. Use your offset account: Every dollar in your offset reduces the interest you pay
5. Make extra repayments: Even small additional payments make a big difference over time

What to Do When Rates Fall

1. Keep repayments the same: If your rate drops but you maintain your old repayment amount, you'll pay off your loan years faster
2. Check you're getting the cut: Not all lenders pass on rate cuts in full — check and switch if needed
3. Consider fixing: If rates are at a historic low, locking in could protect you from future rises

Stay Informed with Jain Home Loans

We monitor every RBA decision and help our clients respond strategically. Whether rates go up or down, Nipun can help you make the right move. Call 0469 618 750 for personalised advice.