Why Your Bank Can Raise Rates Even When the RBA Doesn't

Updated October 2026 by Albert Waldron, Awesome Lending Solutions. This article first appeared on awesomelendingsolutions.com.au.

Many borrowers assume their home loan rate only moves when the Reserve Bank (RBA) changes the cash rate. That's not always true. Banks can, and sometimes do, change rates on their own. Here's why that happens and what you can do about it.

What the RBA controls

The RBA sets the cash rate, which is the rate banks charge each other for overnight loans. It's the RBA's main tool for managing inflation. In 2026, the RBA raised the cash rate four times, taking it to 4.60% at the end of September, its highest level since 2011.

When the cash rate moves, most lenders follow quickly. But the cash rate is only one part of what it costs a bank to lend you money.

Why banks can raise rates when the RBA doesn't

1. Funding costs

Banks get money from deposits and from borrowing in Australian and overseas markets. If those costs rise, banks may pass them on, even if the cash rate stays the same.

2. Regulation

The banking regulator, APRA, sets rules on how much capital banks must hold and how they lend. Back in 2015, APRA's limits on investor lending led many banks to raise investor and interest-only rates outside the RBA cycle. In February 2026, APRA introduced a new limit on loans where total debt is six or more times income. Rules like these can affect how banks price certain loans.

3. Risk and loan type

Banks price investor, interest-only and high-LVR loans differently. They may lift rates on one type of loan to slow demand.

4. Competition and profit

Banks also set rates based on how hard they're competing for customers and their own profit targets.

Why new customers often get better rates

Many lenders offer sharper rates to attract new borrowers than they give existing ones. Over time, a loyal customer can end up paying noticeably more than someone who just walked in the door. This is sometimes called the "loyalty tax".

What you can do

1. Know your rate. Check your latest statement.
2. Compare it with new-customer rates for a loan like yours.
3. Ask your lender for a rate review. Many will lower your rate if you ask, especially with a competing offer.
4. Consider refinancing if your lender won't move.
5. Use an offset account to reduce the interest you pay.
6. Think about a split loan if you'd like some certainty while rates are rising.

An example

Lisa's $600,000 variable loan was at 6.64% after the 2026 rises. New customers with a similar loan were being offered about 6.14%. Her broker asked her lender for a review, and when they wouldn't match it, helped her refinance. Her repayments fell by about $200 a month.

Frequently asked questions

Can my bank raise my rate without the RBA moving?

Yes. Variable rates can change at any time. Your lender must tell you about the change.

Do banks always pass on RBA rate cuts in full?

Not always. Some pass on more or less, and timing can vary.

How often should I check my rate?

At least once a year, and after every RBA change.

Talk to Awesome Lending Solutions

We can check your rate against the market and, if there's a better deal, help you get it, whether that's with your current lender or a new one. Call us on 02 7904 9560 or visit awesomelendingsolutions.com.au to book a chat.

This article is general information only. It does not consider your objectives, financial situation or needs, and it is not financial, tax or legal advice. Rules, interest rates and laws were current as at October 2026 and can change. Speak with a licensed professional before making any decision. Albert Waldron is a Credit Representative (CR 407514) of AFG's Australian Credit Licence 389087.