How RBA Rate Moves Affect Your Mortgage
The Reserve Bank of Australia (RBA) sets the cash rate, which influences the interest rates that lenders offer on home loans. When the RBA changes the cash rate, lenders may adjust their variable mortgage rates, which directly affects your monthly repayments.
What Happens When the Cash Rate Changes
If the RBA lowers the cash rate, lenders might reduce their variable rates, leading to lower monthly repayments for borrowers with variable-rate loans. Conversely, if the RBA raises the cash rate, lenders may increase their rates, resulting in higher repayments. The exact impact depends on your loan amount, interest rate, and loan term.
Example Calculations for Different Loan Amounts
To illustrate how a rate change affects repayments, consider a hypothetical scenario where the cash rate changes by 0.25 percentage points. For a loan of $500,000 with a 30-year term, a 0.25% increase in the interest rate would raise the monthly repayment by approximately $70. For a $750,000 loan, the increase would be around $105 per month, and for a $1,000,000 loan, it would be about $140 per month. These figures are illustrative and assume the full rate change is passed on by the lender.
Factors That Influence Your Repayments
Your actual repayment change depends on several factors, including whether your loan has a variable or fixed rate, the size of your loan, and the remaining term. Lenders may also choose to pass on only part of a rate change, so the impact on your repayments can vary.
What to Consider as a Borrower
If you have a variable-rate home loan, it’s important to review your budget and consider how potential rate changes could affect your monthly payments. You may also want to explore options such as refinancing or fixing your rate, but these decisions should be based on your personal circumstances and financial goals.
For more information on home loan options and strategies, you can refer to our 2026 Australia Home Loan Guide.