Rates & Market
How RBA rate decisions affect your mortgage
7 min read · By Daniel Lagden · 10 June 2026
The short version
- The RBA sets the cash rate; lenders decide how much of any change to pass on.
- Variable rates can move after a decision; fixed rates are locked for the term.
- Lenders don't always pass on cuts in full, or hikes immediately.
- What you can control matters more than predicting the next move.
The Reserve Bank of Australia meets through the year to set the cash rate — the interest rate that anchors the cost of money in the economy. When it changes, it ripples through to mortgages, but the path from 'RBA announcement' to 'your repayment' has more steps than most headlines suggest.
Cash rate vs your rate
The cash rate is not your home loan rate. Lenders set their own rates and decide how much of any RBA move to pass on. After a cut, some lenders pass it on in full, some partially, and some take their time. After a hike, increases often arrive promptly. The gap between the cash rate and what borrowers actually pay is where a lot of 'loyalty tax' hides.
Variable vs fixed in a moving market
- Variable rates can rise or fall after RBA decisions and lender repricing. Your repayments move with them.
- Fixed rates are locked for the fixed term, so a fixed borrower is insulated from moves — in both directions — until the term ends.
- When a fixed term ends, you revert to a variable rate that may be very different from when you fixed.
Nobody can reliably predict the next RBA decision — not us, not the banks, not the forecasters. Building a loan that survives moves in either direction beats betting on a particular outcome.
What you can actually control
- Your rate relative to the market — review it regularly rather than predicting the RBA.
- Your buffer — extra repayments or an offset balance soften the blow of a hike.
- Your structure — fixing part of your loan can give certainty without losing all flexibility.
- Your lender — some consistently price better than others; loyalty is rarely rewarded.
Instead of trying to time the cash rate, we focus on the things you control: keeping your rate sharp, your structure sensible, and a buffer in place. That's what makes rate decisions a news item rather than a crisis.
Run the numbers
Frequently asked questions
Do lenders always pass on RBA rate cuts?
No. Lenders decide independently how much of a cut to pass on and when. Some pass cuts on in full, others partially, and timing varies. Increases often get passed on faster than cuts.
Should I fix my rate before the next RBA decision?
Fixing is about certainty, not beating the RBA. It suits borrowers who value predictable repayments and would struggle with increases. It's a trade-off: you give up flexibility and the benefit of any future cuts on the fixed portion. There's no one-size answer.
Why is my variable rate higher than the advertised rate?
Advertised rates are often for new customers or specific LVRs and products. Existing borrowers can drift onto higher rates over time. A quick rate review — or a refinance — often closes the gap.
