RBA holds cash rate – but you should still check your interest rate

Posted: 5 April 2022 2:30 pm

Your home loan might be safe for now, but rate rises are coming and you need to be prepared.

The Reserve Bank of Australia today held the cash rate at 0.10%. 97% of the experts Finder surveyed predicted this.

Most of these experts expect the RBA will lift the cash rate at some point this year. It's a question of when not if.

Is this good news for borrowers?

If you have a home loan now or need one soon, today's decision is positive. The cash rate has a big impact on lenders' borrowing costs, which in turn affects the pricing of variable interest rates.

If the cash rate rises, we can expect many lenders to immediately increase rates for their customers. This is good news for the interest rate on your savings account but not for your home loan.

But just because the RBA held today doesn't mean it won't lift rates soon. And lenders have already started moving fixed home loan rates up by substantial amounts.

Prepare for rate rises today

To prepare for rate rises, you should:

  1. Check your interest rate right now. It's important to know what your current rate is first. If you're on a fixed rate loan you have nothing to worry about now, but when your fixed period ends you will probably end up on a higher rate.
  2. Compare interest rates across the market. Make sure your interest rate is competitive. A quick check will help you know if you're on a good rate or not.
  3. If you're not on a low rate, consider refinancing to a better one. This will save you money.
  4. If you're happy with your current interest rate, add 2% on top. Let's say your rate is 2.15%. Now change it to 4.15%. Then use a repayment calculator to see how much your repayments will increase with a higher rate. This is a good way to get prepared for when your rate does rise. You'll know how much more you could be paying.

Need a better deal on your home loan? Compare home loan rates from across the market.

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