RBA held 4.35%: calculate before refinancing

On 11 August 2026, the Reserve Bank of Australia left the cash rate target unchanged at 4.35%, effective 12 August. That decision is an important policy benchmark, but it is not the interest rate automatically applied to an individual home loan.

A lender still sets its mortgage rates using funding costs, competition, expected profitability and credit risk. The amount and timing of any pass-through can therefore differ between lenders, products and borrowers.

Why 4.35% is not a home-loan quote

The cash rate target influences lending rates; it does not mechanically equal them. Before comparing refinance offers, obtain the actual ongoing rate available for your loan, the effective date and the features included with that product.

An unchanged RBA decision also does not guarantee that every lender rate will remain unchanged. Wholesale funding, deposit pricing, competition, product strategy and the risk profile of a loan can still affect pricing.

Worked example: 20 months to break even

Assume the total cost of switching is $3,000 and the new loan produces a net monthly saving of $150. The simple break-even period is $3,000 ÷ $150 = 20 months.

This is an illustrative calculation, not a quote or savings guarantee. If the property is sold, the loan is refinanced again or the rate difference changes before month 20, the expected saving may not be realised.

Moneysmart recommends checking possible fixed-rate break costs, discharge fees, application or switching fees, and whether lenders mortgage insurance may apply. Product features and the remaining loan term also affect the comparison.

Refinance check: four terms that control the result

Cash Rate Target — the RBA policy rate used to influence interest rates across the economy; it is not a personal mortgage quote.

Pass-through — how much and when a lender changes its lending rates after shifts in funding or policy conditions.

Effective Date — the date the lender's new rate begins to apply to the relevant loan.

Break-even Period — total switching costs divided by the expected net monthly saving.

Turn the headline into a loan decision

1. Confirm the actual rate — compare your current ongoing rate with a rate that is genuinely available for your circumstances, not only an advertised headline.

2. Add all switching costs — include lender, discharge, application, legal and any applicable break or insurance costs.

3. Check the time horizon — compare the break-even period with how long you expect to keep the property and the new loan.

4. Compare useful features — offset, redraw, repayment flexibility and package fees can change the real value of the loan.

Bottom line

The RBA held the cash rate target at 4.35%, but a refinance decision still needs your lender rate, effective date, total costs and intended holding period. Use your loan numbers—not the headline—to decide whether switching is likely to improve the result.

Sources

Reserve Bank of Australia — Monetary Policy Decision, 11 August 2026

Reserve Bank of Australia — The Transmission of Monetary Policy

Reserve Bank of Australia — Banks' Funding Costs and Lending Rates

Moneysmart — Switching home loans

General information only. This is not financial advice. Loan options and eligibility depend on your personal income, liabilities, assets and lender assessment criteria.