Current Interest rates in Australia

Next RBA cash rate decision: 7 May

Last cash rate cut: 25bp in February

While the RBA has held steady since February, the last rate cut continues to influence lending markets, as well as consumer and property market sentiment.

The RBA board announced a 25 basis point cut on Tuesday 18 February, bringing the cash rate to 4.10%.

"Inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance," its post-meeting statement read.

"There has also been continued subdued growth in private demand and wage pressures have eased.

"These factors give the board more confidence that inflation is moving sustainably towards the midpoint of the 2-3% target range."

The cut marked the first reduction since 2020 and the start of what's expected to be a drawn-out easing cycle.

Other lenders

Fastest mover: Athena Home Loans

Athena was by far the first to implement the February rate cut - moving within hours of the RBA's decision.

Held Back: Virgin Money

Virgin Money was the only lender in our review that did not pass on the February rate cut.

Did your bank pass on the cut? If not, it might be time to refinance. Check out these top rates available now:

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Lender	Home Loan	Interest Rate	Comparison Rate*	Monthly Repayment	Repayment type	Rate Type	Offset	Redraw	Ongoing Fees	Upfront Fees	Max LVR	Lump Sum Repayment	Additional Repayments	Split Loan Option	Tags	Row Tags	Features	Link	Compare	Promoted Product	Disclosure
loans.com.au	loans.com.au Variable Home Loan P&I <90%	5.79% p.a.	5.83% p.a.	$2,931	Principal & Interest	Variable			$0	$530	90%					Owner Occupier Variable Principal & Interest 10% Min Deposit Redraw Extra Repayments More details	Available for purchase or refinance, min10% deposit needed to qualify. No application, ongoing monthly or annual fees. Dedicated loan specialist throughout the loan application.	More details	Compare	Promoted	Disclosure
Ubank (part of NAB)	Ubank (part of NAB) Neat home loan - max. 60% LVR (Owner occupied, Principal and interest)	5.84% p.a.	5.86% p.a.	$2,947	Principal & Interest	Variable			$0	$250	60%					Owner Occupier Variable Principal & Interest 40% Min Deposit Redraw More details	Easy application. Fast approval. No annual fee. Unlimited additional repayments free of charge. Redraw freely - Access your additional payments.	More details	Compare	Promoted	Disclosure
Unloan	Unloan Variable Rate Home Loan LVR < 80%	5.74% p.a.	5.65% p.a.	$2,915	Principal & Interest	Variable			$0	$0	80%					100% owned by Commbank Owner Occupier Variable Principal & Interest 20% Min Deposit Redraw More details	A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.	More details	Compare		Disclosure

Cash rate tracker: What's next for the RBA?

With the April decision behind us, economists remain divided on the pace of further easing.

As of 2 April, those at CommBank, NAB, and Westpac are predicting the board will cut at its May meeting – bringing the cash rate to 3.85%.

ANZ economists, however, think there's just one cash rate cut left in this cycle, with the August meeting appearing the most likely to herald the drop.

Outcome of RBA meetings in 2025:

What is the RBA cash rate?

The Reserve Bank of Australia’s (RBA’s) overnight cash rate target (often simply called the cash rate) influences many things. Though, home loan holders are likely most concerned with how it impacts interest rates.

The RBA cash rate determines how much lenders need to pay to borrow money. The higher the cash rate, the more expensive it is for a bank to operate day-to-day.

Therefore, when the cash rate is high, so to will be the interest rates that banks and lenders charge to borrowers and provide to depositors. After all, banks and lenders want to protect their bottom line, just like the rest of us.

As of 18 February, the cash rate is 4.10%, having been cut from its recent high of 4.35%.

The below chart shows how the cash rate has moved in recent times:

Why do we need a cash rate?

The cash rate serves as a crucial tool in managing the economy.

By adjusting the cash rate, the RBA can influence economic activity, control inflation, and ensure financial stability.

When the economy is overheating and inflation – that is, the price of goods and services – is rising too quickly, the RBA might increase the cash rate to make borrowing more expensive. That, in turn, can be expected to cool down spending and investment.

On the other hand, when the economy is sluggish and growth is subdued, a lower cash rate can stimulate it by making borrowing cheaper and encouraging spending.

Essentially, the cash rate acts as a lever to balance economic growth and maintain a healthy financial system.

However, the cash rate is not without its faults. It is often described as a 'blunt tool' because changes to the rate ripple across the entire economy, impacting far more than just the intended targets.

Why does the RBA cash rate impact home loan interest rates?

To explain how the RBA cash rate influences home loan interest rates, we need to start with how banks manage their money.

Regulations demand that banks maintain a certain level of liquidity at the end of each day. This means they must have a certain amount of cash on hand.

Cash deposits – such as those in savings accounts and term deposits – count towards a bank’s liquidity, while funds lent to borrowers reduce its liquidity.

If a bank disburses more funds through loans and deposit withdrawals within a single day than it receives in new deposits and loan repayments, it might struggle to meet its liquidity requirements.

That’s when the cash rate comes in. A bank can choose to borrow the necessary funds overnight to meet its liquidity needs, and it will be charged the overnight cash rate set by the RBA.

For that reason, when the cash rate is high, so is the cost of doing business for banks. When the cost of doing business is high, banks increase interest rates charged to borrowers to recoup their higher costs.

However, the cash rate isn’t the only factor that impacts home loan interest rates. Sometimes, lenders will adjust their home loan interest rates even if there has been no change in the cash rate. These ‘out of cycle’ home loan rate changes happen frequently.