The Cash Rate Is 4.35%—What Should Mortgage Holders Do Now?

As at 17 June 2026, the cash rate of the Reserve Bank of Australia is 4.35%. The RBA kept the rate unchanged at its June meeting after three increases earlier in the year for a total of 0.75 percentage points. Its next monetary policy decision is due on 11 August 2026.

The break provides mortgage holders with the opportunity to evaluate their position without rushing into a decision.

If the cash rate is on hold, it doesn't mean your home loan is competitive. Your lender may have changed its pricing, your fixed or interest-only term may be coming to an end or a different loan structure may now be more appropriate for your circumstances.

Don’t panic or refinance because rates have changed. It should be to know your current loan, check your financial buffer and compare the options available very carefully.

What is the cash rate?

The cash rate is the interest rate banks pay when borrowing money from each other overnight.

The RBA has a target for this rate as part of its monetary policy. The cash rate affects other interest rates in the economy, like home-loan and savings-account rates.

But the cash rate is not the interest rate you pay on your home loan.

A cash rate of 4.35% does not mean your mortgage rate should also be 4.35%. The rate on your home loan reflects the lender’s cost of funding and operating, the risk of the loan, the market competition and the lender’s own pricing decisions.

Why do lenders offer different home loan rates?

Not all lenders respond to RBA decisions in the same way.

Some will pass on a change in cash rate in full, some will change rates by a different amount or at a different time. Lenders may also charge different prices for new and existing customers.

Some factors that can affect your rate include:

• Whether the loan is for a home or investment property

• Your loan-to-value ratio

• Whether repayments are principal and interest or interest only

• Whether the rate is fixed or variable

• Your credit history and overall financial position

• The loan features you require

• The lender’s current appetite and pricing

Variable home-loan rates vary by more than two percentage points in the market, according to ASIC’s Moneysmart. It also explains that the RBA cash rate is not the only factor determining what a lender will charge.

This means that two borrowers with similar loan balances may be paying vastly different interest rates.

What does the current rate mean in terms of repayments?

Generally, variable-rate loan borrowers are more vulnerable to lenders changing their rates.

An increase of even a modest amount can add up over a large mortgage, especially for households already facing higher costs of living. Borrowers should not assume their repayment or interest rate has remained the same and should review their loan statements.

It is also important to prepare for future changes to your loan. Review your position if:

• A fixed-rate period is ending

• An interest-only period is finishing

• Your minimum repayment has increased

• Your income or expenses have changed

• You have used most of your available savings

• You are regularly relying on credit to cover ordinary costs

It’s not a prediction of the RBA’s next move. It's to ensure that your budget can accommodate reasonable changes.

Know the two buffers for repayment

In home lending, the word “buffer” means two different things.The lender’s serviceability buffer

The buffer to operate the lender Banks regulated by APRA generally have to test if a new mortgage applicant could afford repayments at a rate at least three percentage points higher than the actual loan rate.

For example, the rate for a 6% priced loan may be taken as 9% or more for the purposes of an application.

That doesn’t mean the borrower will pay 9%. It is an assessment tool to provide a margin of safety for the borrower in the event of rising rates or changes in income and expenses. In May 2026, APRA reaffirmed the three percentage point mortgage serviceability buffer remains in place.

Your personal financial cushion

Your personal buffer is money that you have put aside to help you with unexpected expenses or temporary changes in income.

This could be a savings account or, if suitable, an offset account linked to your mortgage. Moneysmart describes an emergency fund covering about three months of expenses as a useful target, while recognising that starting with a smaller amount is still worthwhile.

How much is right will depend on your household, job stability, expenses and financial commitments.

Review First – Refinancing Is Not Always Necessary

You don’t need to change lenders to review your home loan.

Begin by checking:

• Your current interest rate

• Your outstanding loan balance

• Your remaining loan term

• Your repayment amount and frequency

• Annual and ongoing fees

• Offset or redraw features

• Fixed-rate or interest-only expiry dates

• How the loan compares with similar options

Then ask your current lender if there is a lower rate or better product available.

This is often referred to as a repricing request.

It can be useful to help you improve your position without having to go through a full refinance application.

Moneysmart advises you to check with your current lender before switching and compare the costs, rates and features of other loans.

When is refinancing worth considering?

Refinancing may make sense if you find another lender who offers a better overall mix of rate, fees, features and loan structure.

Here are reasons to consider refinancing:

• Your current rate is no longer competitive

• Your fixed-rate period is ending

• Your financial position has changed

• You need different loan features

• You want to restructure your home and investment lending

• Your current lender will not review its pricing

But a lower advertised rate doesn’t always mean you’ll save money by refinancing.

Costs include discharge fees, application fees, valuation costs and fixed rate break costs. If you don’t have a lot of equity in your property, you may also have additional restrictions or have to pay lenders mortgage insurance.

You also have to be careful about starting a new 25 or 30 year loan term. The longer the term, the smaller each monthly repayment will be, but the more interest you’ll pay over the life of the loan. Moneysmart recommends comparing the costs of switching and, if it makes sense, keeping the term of the new loan close to what is left on the existing mortgage.

What happens if you find it difficult to make repayments?

If you have trouble making repayments, talk to your lender early.

Lenders have hardship teams who can discuss options such as reducing repayments temporarily, pausing payments or changing the loan terms through a hardship variation.

“Borrowers generally have more options if they seek help early rather than waiting until they’ve missed several repayments,” says Moneysmart.

The great lesson

The 4.35% cash rate matters, but it’s only one piece of your mortgage.

Your actual rate and repayment will depend on your lender, loan structure, financial position and the features attached to your loan.

Rather than reacting to every RBA announcement:

• Review your current interest rate and fees

• Check your household repayment buffer

• Ask your existing lender whether better pricing is available

• Compare suitable alternatives

• Consider all refinancing costs before switching

• Seek help early if repayments are becoming difficult

At Power of Finance we will review your existing mortgage and compare suitable options from our approved lender panel. Depending on your situation, this might mean staying with your lender, asking for better pricing, or looking into refinancing.