We all hear about the RBA, but what do they actually do? This plain-English guide explains what the Reserve Bank of Australia is, what the official cash rate means, and how it influences the interest rate on your Gold Coast mortgage. Learn why the RBA rate is only one part of the story and how you can secure a more competitive deal.
On the first Tuesday of most months, the "RBA" is all over the news. But who are they, what is the 'cash rate', and what does it actually mean for your Gold Coast mortgage? Understanding the basics is key to feeling in control of your finances.
Who is the RBA? The Reserve Bank of Australia (RBA) is Australia's central bank. One of its main jobs is to set the nation's monetary policy to keep the economy stable and inflation in check.
What is the Official Cash Rate? The cash rate is the interest rate at which banks lend money to each other overnight. Think of it as the 'wholesale' cost of money. The RBA moves this rate up or down to either cool down or stimulate the economy.
How Does it Affect Your Mortgage? The cash rate is a major influence on the variable interest rates that banks offer on home loans. When the RBA increases the cash rate, banks' funding costs go up, and they typically pass this on to customers by raising their mortgage rates. When the RBA cuts the rate, banks are expected to pass on the savings.
The Most Important Thing to Know The RBA rate is just the benchmark. The final interest rate you pay is determined by fierce competition between lenders. Banks will often offer much sharper, discounted rates to win new customers, while leaving existing, loyal customers on a higher rate.
This is where a broker comes in. Our job is to leverage that competition. We compare the market to ensure you're not just getting a rate that reflects the RBA's moves, but that you're getting one of the most competitive deals available for your specific situation.
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