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 cost 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. ‍

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Calculations are not a loan approval. Applications are subject to credit approval, satisfactory security and minimum deposit requirements. Full terms and conditions will be set out in our loan offer, if an offer is made.

^Rates shown are inclusive of a 0.01% p.a. discount off our reference rate. On each anniversary of your loan’s settlement date, you will receive an additional discount of 0.01% per annum, up to a maximum discount of 0.30% per annum. For purchase loans with a Loan to Value Ratio (LVR) between 80.01% - 90% LVR, a lenders mortgage insurance (LMI) premium and higher interest rate apply. In some cases depending on the property’s location or type, LMI may also be required for LVR between 70.01% and 80%.

*Comparison rate is calculated on a $150,000 secured loan over a 25 year term. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.