RBA Holds Rates Steady: What It Means for Home Buyers

The Reserve Bank of Australia (RBA) held the official cash rate steady at 4.35% at its first meeting of 2024. This decision provided some relief for mortgage holders who had seen their repayments increase significantly over the previous two years of rate rises.

For borrowers, this hold signalled that the tightening cycle was likely at or near its peak. Understanding what rate holds mean for your mortgage strategy is critical, whether you are on a variable rate, locked into a fixed term, or considering entering the property market.

What the Rate Hold Means for Borrowers

If you have a variable rate home loan, your repayments remain unchanged following a rate hold. However, the impact varies depending on your loan size and current rate. Here is how different loan sizes are affected at the 4.35% cash rate environment.

Loan Amount	Approx. Variable Rate	Monthly Repayment (30 yr)
$400,000	6.25%	$2,462
$500,000	6.25%	$3,078
$700,000	6.25%	$4,309
$1,000,000	6.25%	$6,156

Use our repayment calculator to see exactly what your repayments would be based on your specific loan amount and interest rate.

How We Got to 4.35%

The RBA raised the cash rate 13 times between May 2022 and November 2023, taking it from a record low of 0.10% to 4.35%. This was the most aggressive tightening cycle in a generation. The cumulative impact on a $600,000 mortgage was an increase of approximately $1,500 per month in repayments.

By January 2024, inflation was beginning to moderate, and the RBA opted to pause and assess the effect of previous rate rises on the economy. This pause gave borrowers breathing room and signalled that the worst of the rate rises was behind them.

Is Now a Good Time to Buy?

With rates appearing to stabilize, many buyers who had been waiting on the sidelines started considering entering the market. There are several reasons why a rate hold environment can present opportunities for buyers.

• Reduced competition. Many potential buyers remain cautious, meaning less competition at auctions and private sales
• Motivated sellers. Some property owners under mortgage stress may be more willing to negotiate on price
• Rate cut potential. Buying before potential rate cuts means you could benefit from reduced repayments after purchasing
• Price stability. Property prices in many areas have shown resilience despite the rate rises, suggesting a floor has been reached

That said, timing the market perfectly is impossible. The best time to buy is when your personal finances are in order and you have a clear understanding of your borrowing capacity. Read our complete first home buyer guide for a step-by-step approach.

Fixed vs Variable Rate Considerations

With the RBA signalling a potential end to rate rises, the decision between fixed and variable rates becomes more nuanced. Each option has distinct advantages depending on where you think rates are heading.

Variable Rate Loans

Variable rates move with the market. If the RBA begins cutting rates, your repayments will decrease automatically. This flexibility also allows features like offset accounts and extra repayments without penalties.

Fixed Rate Loans

Fixed rates lock in your repayment amount for a set term (usually 1 to 5 years). This provides certainty and protection against potential rate increases. However, if rates fall during your fixed term, you will not benefit from lower repayments until the term expires.

Split Loans

A split loan divides your mortgage into a fixed portion and a variable portion. This approach gives you the security of knowing part of your repayment is locked in, while still benefiting from any future rate cuts on the variable portion.

Feature	Variable	Fixed	Split
Benefits from rate cuts	Yes	No	Partially
Protected from rate rises	No	Yes	Partially
Offset account	Yes	Rarely	On variable portion
Extra repayments	Unlimited	Capped or penalty	Unlimited on variable
Repayment certainty	Low	High	Medium

For a deeper analysis of fixed versus variable strategies, read our comprehensive fixed vs variable rate comparison.

What to Do During a Rate Hold

A rate hold is not the time to sit back and do nothing. It is an opportunity to strengthen your financial position before the next move, whether rates go up or down.

1. Review your current rate. Many borrowers are on rates higher than what is available in the market. Check whether you could save by refinancing to a more competitive rate
2. Make extra repayments. While rates are stable, consider putting extra money toward your mortgage to reduce the principal faster
3. Build your offset balance. Every dollar in your offset account reduces the interest you pay
4. Check your loan features. Ensure your current loan has the features you need, such as redraw, offset, and the ability to make extra payments without penalty
5. Get a rate health check. A mortgage broker can compare your current rate against hundreds of products to see if you are paying too much

If you have not reviewed your home loan in the past 12 months, there is a strong chance you are paying more than you need to. See our guide to avoiding costly refinancing mistakes before making a decision.

Frequently Asked Questions

What does it mean when the RBA holds the cash rate?

When the RBA holds the cash rate, it means they have decided not to increase or decrease the official interest rate. For borrowers on variable rate loans, this means your repayments stay the same. It does not mean rates will remain at this level permanently.

Will the RBA cut rates soon?

Rate decisions depend on inflation data, employment figures, and global economic conditions. The RBA has since begun cutting rates in 2025, and further cuts are expected as inflation moderates. However, the timing and size of cuts are never guaranteed.

Should I fix my rate when the RBA holds?

It depends on your risk tolerance and financial goals. If you believe rates will stay high for an extended period, fixing can provide certainty. If you believe rates will fall, staying variable allows you to benefit from future cuts. A split loan offers a middle ground. Speak with a mortgage broker to assess your options.

How much does a 0.25% rate cut save on a typical mortgage?

On a $600,000 loan over 30 years, a 0.25% rate reduction saves approximately $95 per month, or $1,140 per year. Over the full loan term, this adds up to over $34,000 in interest savings.

Is it worth refinancing when rates are on hold?

Yes. A rate hold is actually a good time to refinance because it gives you a stable environment to compare products and negotiate. Many borrowers find they can save thousands simply by switching to a more competitive lender. Use our home loan comparison tool to see what is available.