What the cash rate actually is
The cash rate is the interest rate the Reserve Bank of Australia (RBA) sets for loans between banks. It’s not directly the rate on your mortgage. But it’s the main number most lenders look at when setting their own variable rates. A group at the RBA meets roughly every six weeks. They decide whether to raise, lower, or hold the cash rate, based on prices, jobs, and how the economy is doing.
How it reaches your repayment
When the RBA moves the cash rate, banks usually change their variable home loan rates too. But not always by the same amount, and not always straight away. A lender might pass on the whole change, only part of it, or sometimes more — depending on their own costs and how they’re competing for customers at the time.
If you’re on a variable rate, a rate change usually adjusts your repayment amount. So a rate rise usually shows up as a higher minimum repayment within a cycle or two. A cash rate reduction usually shows up as a lower minimum repayment within a cycle or two.
Fixed-rate loans don’t move with the cash rate during the fixed period — that’s the whole point of fixing. The trade-off is that you also don’t benefit if rates fall during that time. I cover this properly in my fixed vs variable guide.
What to do when the rate moves
- Check your budget against the new repayment instead of assuming it’s fine — especially after several rises in a row.
- Review any offset or redraw balance you’re holding. An offset account is a savings account linked to your loan — it works harder for you when rates are higher.
- Check whether your rate is still competitive. Lenders don’t always treat existing customers the same as new ones, which is one of the most common reasons refinancing becomes worth it over time.
Where things stand right now
As at 9 October 2026, the RBA’s cash rate target is 4.60%. The Board raised the rate by 0.25 percentage points at its 29 September 2026 meeting. This is exactly the kind of number that goes out of date fast. If you’re reading this a while after it was published, check the current rate directly at rba.gov.au rather than relying on the number above.
Sources
- Reserve Bank of Australia 2026, Statement by the Monetary Policy Board: Monetary Policy Decision, 29 September, viewed 9 October 2026, rba.gov.au/media-releases/2026/mr-26-27.html.
- Repayment example calculated by Blue Guide Finance using a standard principal-and-interest formula, 9 October 2026.