The RBA just increased the cash rate for the first time in more than 2 years - what does this mean for you?

RBA Raises Cash Rate to 3.85%: What This Means for Your Home Loan

The Reserve Bank of Australia (RBA) has announced an increase to the official cash rate, lifting it to 3.85%.

For homeowners and buyers, this raises an important question:
What does this mean for my home loan, and what should I do next?

While interest rate changes can feel unsettling, understanding how they affect your loan — and having a plan in place — can make a big difference.

What Does a Rate Rise Mean in Real Numbers?

To put this change into perspective, here’s a general example:

On a $600,000 home loan over 30 years, a 0.25% rate increase could result in:

An increase of approximately $80–$100 per month in repayments
Around $1,100–$1,200 more per year

(These figures are estimates only and will vary depending on your lender, interest rate and loan structure.)

If You’re on a Variable Rate Loan

Most lenders are expected to pass on the rate increase to variable home loan customers. This means your minimum monthly repayments may rise in line with the new cash rate of 3.85%.

What you can do now:

Review your household budget and factor in the change
Consider making small extra repayments to reduce long-term interest
Check whether your current loan is still competitive
Explore refinancing or restructuring options
Speak with a mortgage broker to review your position

Even small adjustments now can help soften the impact of future changes.

If You’re on a Fixed Rate Loan

If your loan is currently fixed, your repayments will not change during your fixed-rate period. You’re protected from today’s increase — for now.

What you should do:

Take note of when your fixed rate expires
Start planning early (ideally 3–6 months before expiry)
Review your options before your loan rolls onto a higher variable rate
Consider locking in a new strategy rather than waiting for changes to happen

Being proactive can help you avoid payment shock when your fixed term ends.