Australia raises rates to 4.60%: what changes for borrowers?

Australia’s central bank raised its cash rate by 0.25 percentage points to 4.60% on Tuesday, its fourth increase this year. The Reserve Bank said inflation remained too high and that some of the risks it had flagged were beginning to materialize.

What could this mean for car loans and mortgages?

A higher cash rate can put upward pressure on lenders’ rates, but it does not automatically change every loan by the same amount. For a variable-rate mortgage or car loan, repayments may rise if the lender increases its rate. A fixed-rate loan generally keeps the agreed payment during its fixed period. Lenders also consider funding costs, competition and the borrower’s loan terms.

So the useful question for a borrower is not only “Did the central bank raise rates?” but also “Is my loan fixed or variable, and has my lender changed its rate?”