Broadly speaking, Australian interest rates fall in times of economic crisis, low inflation and high unemployment. Rates rise, sometimes very fast, when the economy is booming or inflation is surging.
Since 2022, inflation has pushed rates sharply higher. One of the fastest tightening cycles in decades took the cash rate to 4.35% by late 2023, before the RBA eased through 2025 and then resumed hiking in early 2026. As of September 2026, the official cash rate sits at 4.35%, according to the Reserve Bank of Australia, following further RBA holds in June and August 2026.
The major driver of interest rates is the official cash rate target set by the Reserve Bank of Australia (RBA).
When the cash rate falls, interest rates on home loans and savings accounts fall. This is good news for borrowers but bad news for savers earning interest in their savings accounts.
After sitting near zero during the pandemic, both savings and lending rates began to climb sharply from mid-2022 as the RBA raised the cash rate to curb inflation.
As of September 2026, the RBA cash rate is 4.35%, while the average bonus savings rate is about 4.8%, with major banks offering between 4.1% and 5.2%. The gap between the two remains consistent, showing how banks adjust savings returns in line with monetary policy.
The graph above shows how savings rates from the Big Four banks have moved as the RBA raised the cash rate. (ANZ, CBA, NAB and Westpac)
Savings account rates climbed sharply through 2022 and 2023 as the RBA lifted the cash rate to curb inflation, with most big banks' bonus rates peaking near 5% by mid-2024. They eased through 2025 as the RBA began cutting, with the cash rate falling to 3.60% by the start of 2026. That easing proved short-lived. Three consecutive rate hikes in February, March and May 2026 lifted the cash rate back to 4.35%, and savings rates have followed it higher.
While savings rates continue to track the cash rate closely, banks have often been slower to pass on increases in full. As of September 2026, bonus rates among the Big Four sit between 4.8% and 5.2%, compared with the current 4.35% cash rate. The RBA has held at 4.35% since May 2026, most recently at its August meeting, and savers are again being rewarded for shopping around.
Home loan rates have shifted dramatically over time. From 1959 to 1990, the standard variable rate climbed steadily, peaking at around 17% in 1990. After the early 1990s, rates trended lower for decades, dropping sharply after the Global Financial Crisis and again during the COVID-19 pandemic, when some borrowers paid under 2%.
Rates began rising again in 2022 as the RBA tightened policy. After a brief easing through 2025, the RBA resumed hiking in early 2026, lifting the cash rate back to 4.35% by May. As of September 2026, the average standard variable rate sits around 8.5%, while discounted owner-occupier rates are near 7% and 3-year fixed rates average about 6.5%.
The cash rate reached 17.50% in early 1990 as the RBA fought high inflation. Mortgage repayments became extremely expensive, but the peak was short-lived.
By July 1993, the cash rate had fallen to 4.75% as the economy recovered from recession. Inflation was under control, though growth remained modest.
During the GFC, the RBA slashed the cash rate from 7.25% to 3.00% by early 2009 to support the economy amid global turmoil.
Rates stayed low for years after the GFC, before hitting a record low of 0.10% in November 2020 to counter the economic shock of COVID-19. This period also saw a surge in property prices.
As inflation surged due to supply shortages, post-pandemic demand and global conflicts, the RBA began one of the fastest tightening cycles in its history, lifting the cash rate from 0.10% in May 2022 to 4.35% by late 2023. The pace of rate hikes slowed throughout 2024 and, as inflation eased, the RBA began cutting rates in 2025, bringing the cash rate down to 3.60% by the start of 2026.
Inflation picked up again by the start of 2026, and with oil prices climbing on Middle East tensions, the RBA reversed course. Three hikes in February, March and May 2026 lifted the cash rate from 3.60% back to 4.35%. The RBA held at that level in June and again in August 2026, keeping the rate at its 2023 peak.
The graph below shows the average bonus savings rate across Australian savings accounts each year.
| Year | Average bonus savings rate |
|---|---|
| 2002 | 2.9 |
| 2003 | 2.94 |
| 2004 | 3 |
| 2005 | 3.4 |
| 2006 | 4.03 |
| 2007 | 4.6 |
| 2008 | 5 |
| 2009 | 2.39 |
| 2010 | 3.94 |
| 2011 | 5.11 |
| 2012 | 4.96 |
| 2013 | 4.27 |
| 2014 | 3.77 |
| 2015 | 2.88 |
| 2016 | 2.33 |
| 2017 | 1.92 |
| 2018 | 2.08 |
| 2019 | 1.89 |
| 2020 | 1.01 |
| 2021 | 0.35 |
| 2022 | 1.37 |
| 2023 | 4.45 |
| 2024 | 4.87 |
| 2025 | 4.30 |
| 2026 | 4.41 |
Source: RBA
The RBA sets the cash rate target, which is the benchmark interest rate that influences how banks lend to each other overnight. Changes in this rate affect how much banks charge borrowers and pay savers.
When inflation is high, the RBA raises the cash rate to cool spending and slow price growth. When the economy weakens, it cuts rates to encourage borrowing and investment.
The cash rate directly shapes rates on home loans, savings accounts, and term deposits, and remains one of the most important indicators of Australia’s economic health.
The cash rate has a major impact on the rates banks and lenders set for:
The cash rate is a policy tool that allows the RBA to influence the economy. Generally speaking:
Banks and lenders adjust their interest rates on home loans and savings accounts because of many factors. The cash rate is a major one, but there are many others.
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do you have historical monthly interest rate data for the Westpac (unsecured) Business Overdraft Rate?
Hi John, No, we don’t track individual bank interest rates.