The RBA held the cash rate steady in April 2021, but the low-rate window may not stay open for long.
The Reserve Bank of Australia held the RBA cash rate at 0.10% in April 2021, keeping home loan rates at historic lows. The RBA signalled it did not plan to raise rates before 2024, but growing confidence in the economic recovery has led some analysts to question whether that timeline will hold.
With property prices rising sharply across Sydney and other capital cities, buyers face a real tension: prices are climbing, yet borrowing conditions remain favourable. Use our borrowing power calculator to understand what you can borrow today before conditions change.
Rising prices
Property prices across many Australian capital cities have been climbing at rates not seen in years. Sydney’s auction market reached a median house price of $1.755 million in March 2021, a gain of more than $100,000 in a single month. That pace puts genuine pressure on first home buyers trying to save while prices pull further ahead.
Brisbane, Adelaide and a range of regional markets have also recorded strong gains. The combination of record-low rates, government stimulus and increased buyer demand has driven values higher across most segments of the market.
For buyers watching from the sideline, the risk of waiting is real. Prices may continue to climb even before rates rise. Getting into the market while borrowing is still cheap is a legitimate strategy worth considering.
Rate outlook
The RBA has made its conditions clear. Before it will lift rates, it needs to see inflation sit sustainably within the 2-3% target band and wages growing strongly enough to confirm a tight labour market. In April 2021, those conditions had not yet been met.
That said, the RBA’s 2024 guidance was conditional rather than absolute. If the economy recovered faster than expected, particularly through a successful vaccine rollout and strong household spending, the board could revise its position earlier.
It is also worth understanding that banks don’t always wait for the RBA before adjusting home loan rates. Several lenders had already nudged fixed rates upward ahead of any official change. Macro-prudential tools such as tighter borrowing limits could also affect how much you can borrow, even with the cash rate on hold.
What it means for you
For home buyers, the current RBA cash rate hold still creates a favourable environment. Variable rates are at multi-decade lows and lenders are competing strongly for business. Even if your deposit is modest, you can potentially borrow at very competitive terms right now.
Knowing how rate movements affect your borrowing capacity helps you plan effectively. A 0.50% rise in the cash rate, passed on in full by your lender, can reduce your approved borrowing amount by a significant margin. Locking in your approval now means you know your budget before conditions tighten.
If you already have a home loan, the current period of rate stability is a good time to review your rate. Many borrowers who have not refinanced recently are paying well above current market rates. A broker can check what is available across the full panel of lenders and potentially save you thousands over the life of your loan.
Act now
Whether you are buying your first home or reviewing an existing loan, there are practical steps you can take while the RBA cash rate hold is in effect.
The RBA cash rate hold is still supporting borrowers. Getting informed and prepared now means you will be ready to move when the right opportunity arrives.
Common questions
Q: Will the RBA definitely hold rates until 2024?
Not necessarily. The RBA’s guidance was conditional on economic outcomes, including inflation and employment targets. If those conditions were met earlier than expected, a rate rise could happen before 2024. Markets at the time were already factoring in some chance of an earlier move.
Q: Should I fix my home loan rate now to protect myself?
Fixing can provide certainty over your repayments, but it comes with trade-offs such as limits on extra repayments and break costs if you need to exit early. Many borrowers use a split loan to balance stability and flexibility. The right choice depends on your financial goals and how long you plan to stay in the property.
Q: Can my bank raise my rate even if the RBA does not move?
Yes. Banks source their funding from multiple channels, not just the RBA cash rate. If their own borrowing costs increase, or they want to adjust their risk exposure, they can raise rates independently. This is especially common with fixed rates, which are priced off bond market movements rather than the cash rate.