12 May 2022

How Quickly Do Interest Rates Change?

Interest Rates Change

The Reserve Bank of Australia meets 11 times annually. They meet monthly except for January. At their meeting, they decide to raise the cash rate or keep it the same. Another option available to the RBA is to lower it. The changes take effect immediately and the media will report them to interested parties. The cash rates affect banks immediately. Any transactions they complete that evening after hours remain subject to the new cash rates.

If the change is significant enough, the bank will immediately raise interest rates for their clients who hold debt products. Plus, they raise them for future clients too. Thus, the interest rates change almost immediately, especially if a sense of urgency exists. Homeowners who hold variable-rate mortgages might not see their interest rates change until the new quarter. However, if the change requires a big jump, banks will start the clock on them immediately. 

The RBA attempts to prevent severe fluctuations. They know that the public will shy away from borrowing if they see rates jump significantly. Plus, they want to prevent the population from shying away from variable rate loans again. 

Mortgage House provides clients with tools that help them hedge against sudden increases in interest rates. Therefore, we attempt to put our clients in financial positions to succeed and the most competitive loan terms.

Check out our Mortgage House mortgage calculator with no strings attached.

Interest Rates Change Conclusion

How quickly interest rates change depends on the sense of urgency felt by the RBA. It also depends on how the lending institutions feel at any given time. To explore your options, contact our Mortgage House loan specialists.

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