Current Interest Rate Australia: RBA Cash Rate at 4.35%

Few financial numbers affect Australian households as directly as the official cash rate. Whether you’re a homeowner watching your mortgage repayments or a saver checking your interest yield, the current rate of 4.35% set by the Reserve Bank of Australia shapes real decisions every day.

RBA Cash Rate: 4.35% ·
Average Variable Home Loan Rate: 6.34% p.a. ·
Average 1-Year Fixed Rate: ~5.79% p.a. ·
Last RBA Change: November 2023

What is Australia’s interest rate now?

Current RBA cash rate

The Reserve Bank of Australia (RBA) sets the official cash rate, which currently stands at 4.35% – the highest level since December 2011. This benchmark influences everything from home loan rates to savings account returns. The RBA last made a change in November 2023, raising the rate by 25 basis points (InfoChoice (Australian rate comparison platform)).

How the cash rate is set

• The RBA Board meets eight times a year to decide the cash rate.
• Decisions are based on inflation data, employment figures, and economic outlook.
• The Board considers both domestic and global conditions (Boyce Chartered Accountants (business advisory firm)).

Where to find official rates

The RBA publishes its official cash rate target on its website, while comparison platforms like InfoChoice and Canstar track current mortgage and savings rates across dozens of lenders. These sources provide transparent, up-to-date data for borrowers and savers.

What are current mortgage rates in Australia?

Variable vs fixed rates

Two main types of home loan rates dominate the market: variable, which moves with the cash rate, and fixed, which locks in a rate for a set term. Currently, average variable rates are around 6.34% from major lenders, while one-year fixed rates average roughly 5.79% – though offers vary by lender and loan size (InfoChoice (Australian rate comparison platform)).

The trade-off: variable rates could fall if the RBA cuts, but they also rise on each hike. Fixed rates provide certainty but often come with break fees if you refinance early.

Rates from major banks

Comparing across the big four banks reveals variations. The following table shows typical standard variable rates:

Four major lenders, one pattern: standard variable rates cluster around 6.34% p.a., with minor differences reflecting fees and features.

Rates sourced from bank websites and comparison data, accurate as of January 2025. (InfoChoice (Australian rate comparison platform))

The implication: even a 0.10% spread between lenders can amount to thousands over a loan’s life.

How to compare cheapest home loans

• Look beyond the headline rate – check the comparison rate which includes fees.
• Use comparison websites like Canstar, InfoChoice, or Mozo.
• Consider loan features: offset accounts, redraw, and fixed-rate options.
• Negotiate with your lender – loyalty discounts are often available.

Is 5.79 a good interest rate?

How 5.79% compares to history

At 5.79%, the average one-year fixed rate is almost three times higher than the historic lows of under 2% seen in 2020–2021. Yet it’s still well below the double-digit rates of the 1990s (Bheja AI (financial data aggregator)). By recent standards, 5.79% is competitive for fixed-term home loans, especially given the cash rate sits at 4.35%.

Factors for a ‘good’ rate

• Your loan-to-value ratio (LVR) – lower LVRs often secure better rates.
• Loan size – larger loans may attract discounts.
• Fixed term – 1-year, 3-year, or 5-year rates differ by up to 0.5%.
• Your credit profile – excellent credit can unlock special offers.

Will rates drop to 3% again?

Most economists do not expect a return to 3% in the near term. The RBA has signalled it wants inflation sustainably within the 2-3% target band before cutting. Money market pricing (via the ASX Rate Tracker) implies the next move is more likely down than up, but a cut to 3% would require a sharp economic slowdown (ASX (Australian Securities Exchange rate tracker)).

The catch: borrower hopes for 3% rates may be dashed for years, unless the economy slows dramatically.

Will mortgage rates drop to 3% again?

What the data says

The RBA’s tightening cycle from 2022 to 2023 lifted the cash rate from 0.10% to 4.35%. With inflation falling, many analysts forecast rate cuts in 2025, but not to pre-2020 levels (Osinski Finance (mortgage broker analysis)). A return to 3% would require the cash rate to drop by 1.35 percentage points – something not priced into current futures.

Economic realities

• Inflation remains above the RBA’s target band.
• Unemployment is low, which supports higher rates.
• Global central banks are still cautious about loosening.

The implication: borrowers hoping for 3% mortgage rates may need to wait several years, if it happens at all.

How much interest can you get on $500,000?

Savings account interest on $500k

High-interest savings accounts currently offer rates ranging from 4% to 5.5% for balances up to certain limits. On a $500,000 deposit, the annual interest at 5% would be $25,000 – but many accounts cap the interest rate on balances above $250,000 or have monthly conditions (Osinski Finance (mortgage broker analysis)).

Mortgage interest on $500k loan

A $500,000 home loan at a variable rate of 6.34% p.a. would cost roughly $2,640 per month in interest alone (excluding principal). That’s nearly $31,700 annually – a stark contrast to the earnings on savings.

Using online calculators

• RBA’s mortgage calculator and comparison sites offer precise repayment figures.
• Input your loan amount, rate, and term to see monthly payments.
• Compare scenarios: variable vs fixed, different loan terms.

Mortgage comparison: variable rates from major lenders

Three common loan sizes, one pattern: the interest cost varies dramatically even with small rate differences. Below illustrates monthly interest for a 25-year principal-and-interest loan.

Calculations based on current average rates. Source: InfoChoice (Australian rate comparison platform)

The pattern: locking in a fixed rate near 5.79% could save a borrower with a $600,000 loan over $3,200 annually versus the variable average.

How to compare home loan rates in Australia

1. Check your current rate and loan details.
2. Compare on comparison sites using the comparison rate.
3. Consider loan features – offset accounts can reduce interest.
4. Talk to a mortgage broker for tailored options.
5. Negotiate with your current lender before switching.

For a borrower, following these steps could mean the difference between paying 6.34% and securing a rate closer to 5.79%.

Timeline of recent RBA cash rate decisions

What we know and what remains unclear

What experts say

“The Board judged that holding the cash rate steady was appropriate to balance inflation and employment objectives.” – RBA Governor (paraphrased from RBA minutes, via Boyce Chartered Accountants (business advisory firm)).

“The cash rate directly influences variable home loan rates, but fixed rates are driven by funding costs.” – Canstar editor-in-chief (via InfoChoice (Australian rate comparison platform)).

For Australian borrowers, the current interest rate landscape is one of high costs and uncertain direction. The cash rate at 4.35% remains historically elevated, and while a cut may come in 2025, the days of sub-3% mortgage rates are distant. The key takeaway: act now – compare rates, negotiate, and consider refinancing to secure the best deal available today.