Time to read : 3 Minutes

Mortgage holders around Australia breathed a collective sigh of relief when the Reserve Bank of Australia (RBA) kept the official cash rate on hold today.

The cash rate sat at 4.35% in December 2023 - and it still does today.

Does this mean your home loan interest rate shouldn’t go up either?

Not really. The RBA’s cash rate hold doesn’t mean that home loan interest rates remain the same.

Lenders don’t have to wait for the RBA to raise rates. They can change your variable home loan interest rate at any time - and they have: many times.

Compare Club’s Head of Home Loans, Anton Stevenson, noted that our own research saw average variable interest rates for the lenders on our panel increase 0.1% this month.

But interest rates didn’t go up in December - did they?

They did not, but there were signs that a few of the banks lifted interest rates across the holiday season, regardless of the cash rate. 

There were several out-of-cycle rate rises from the major banks last year. At least one lender lifted rates in April, despite the RBA leaving the cash rate on hold that month. 

The same thing happened in July. According to the Australian Financial Review:

“Home loan interest rates charged by the major banks to new borrowers are outpacing official cash rate increases.”^

Out-of-cycle interest rate increases:

Anton says: “This cash rate pause gives mortgage holders some breathing room - and time to take action. With property values coming back in many local areas, now is the time to talk to your broker about refinancing to a better value home loan.”

It’s also possible for your lender to lower your interest rate out of cycle. Is it common? No. Does it happen? Yes - we have a lender on panel doing exactly this at the moment.

Out of cycle interest rate changes will likely be more common this year - given that the RBA will only meet eight times, instead of eleven.

It pays to have a vigilant broker by your side - because who can keep up with all the rate hikes, premium increases, costs of living, and the rest?

Certainly not me.

The bottom line:

• The RBA left the cash rate on hold for 2024 so far. 

• This doesn’t stop your lender from raising your home loan interest rate if they want to.

• Watch out for out-of-cycle interest rate increases from your lender. 

• The hold from the RBA gives you an opportunity to take action to lower your home loan repayments. 

• Speaking to a Compare Club broker is a good place to start.