Cash rate and your home loan rate

Cash rate and your home loan rate


Categories: RBA cash rate

The RBA decided to cut 25 basis points on Tuesday (02/August/16) which was in line with expectations:

  • The global economy is continuing to grow, at a lower than average pace
  • Australia’s terms of trade remain much lower than they had been in recent years
  • The underlying pace of China’s growth appears to be moderating
  • In Australia, recent data suggests that overall growth is continuing at a moderate pace, despite a very large decline in business investment
  • Recent data confirms that inflation remains quite low and this is expected to remain the case for some time
  • Supervisory measures have strengthened lending standards in the housing market
  • Growth in lending for housing purposes has slowed a little this year. All this suggests that the likelihood of lower interest rates exacerbating risks in the housing market has diminished

Once the RBA decision was passed, the majors were quick to respond with their decisions on how much they were willing to pass on to their home loan customers:

  • CBA – 0.13%
  • ANZ – 0.12%
  • NAB – 0.10%
  • WBC – 0.10% (Interest only loans) 0.14% (Principal and interest loans)


There will always be ongoing pressure for the big banks to maintain their profitability. As a result there will be pressure on margins. Infact, this current RBA decision works in favour of the banks, the timing couldn’t have been better. Instead of having to introduce an out of cycle rate increase, the banks are now able to strategically ride on the RBA rate cut and maintain their margins for the time being by passing only part of the rate reduction.

As a consumer there are plenty of options out there. It’s a matter of discovering these great deals. At LoanDolphin we have seen rates as low as 3.52% being offered in some instances to low risk consumers even before the rate cut on Tuesday.

At LoanDolphin on average we were able to save our customers 0.50% when they use our loan bidding marketplace. Which means that on a $500,000 loan a rate reduction from 4.1% to 3.6% will save you $31,381 over the next 20 years.

If you are frustrated by your bank’s inability to pass on the full rate cut and want to save thousands check out LoanDolphin and let banks and brokers offer you a better rate by bidding for your mortgage.

Disclaimer: This blog post has not taken into account your objectives, financial situation or needs. Due to this, before acting on any general advice/information in this communication, you should consider whether it is appropriate to your objectives, financial situation or needs.


LoanDolphin is a home loan bidding marketplace where you get banks and mortgage brokers competing for your loan in just a few minutes. For free!