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RBA Cash Rate on Home Loan

Have a Quick Glance at the Effect of RBA Cash Rate on Your Home Loan

July 24, 2017

If you have every thought of buying a home loan, you might be aware of the fact that the interest rate has a great influence on how much you will pay for your home loan. Thus, it is important to be aware of the rates that your lender implements as it will solely determine your repayments.


Reserve bank of Australia is the Australia’s central bank that is responsible for keeping the track of the official cash rate of the country. It also has the authority to move the cash rate in case of economic inflation. You might be aware of the importance of cash rate as it affects the interest rate that your lender charges, thus affecting the repayments that you will owe on your home loan each month. It is only the cash rate that the lenders will decide whether to cut or raise the rates.

Effect of cash rate on home loan rates

Usually, the banks adjust their fees and costs according to the set cash rate. Moreover, home loans are one of the products that are strongly affected, as these home loans are generally much larger than debts or savings.

Work on minimizing the interest irrespective of RBA cash rate

You can minimize the impact of fluctuating interest rates on home loans through some ways, such as –

  • Go for an offset account

An offset account is always linked to your mortgage. It is considered beneficial as the more money you have in this account against your mortgage, lesser your interest will be.

  • Make extra repayments

Sometimes, the lender will allow you to make some extra payments against your home loan in Australia. It will help you to pay off your debt faster as a great amount of your payment will go towards the outstanding loan amount and less will go towards the interest due.

Besides all this, the interest usually builds up when you miss a payment. Thus, if you will pay on time, it will keep you within budget.

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