Navigating Interest Rate Rises

The RBA is Australia's central bank and is responsible for making monetary policy decisions, including setting the cash rate. They can either raise, hold or cut the official cash rate target to manage the Australian economy.

The RBA describes the cash rate as the interest rate that banks pay to borrow funds from other banks in the money market overnight. It influences all other interest rates, including mortgage rates and banks can pass these costs down to their borrowers.

Changes to the cash rate are announced on the first Tuesday of every month (except in January).

There’s no guarantee whether interest rates will increase or decrease.

Although there is uncertainty around whether rates will continue to rise, the RBA sets the cash rate each month, so any changes in the rate will occur on the first Tuesday of every month (apart from January). 

While the RBA’s monetary policy has been to keep the cash rate low, the central bank is now raising rates to combat rising inflation. 

When the RBA lifts rates, the amount it costs BOQ to acquire the funds we lend to our customers also increases. This increased cost needs to be factored into the interest rates we charge and, sometimes, this will result in an increase to our interest rates for home and business lending customers. 

BOQ regularly reviews interest rates to ensure they balance the needs of savers and borrowers and are competitive in the market. 

For existing home lending customers on a variable rate, BOQ will send you a letter informing you of the new repayment amount and when this will take effect. 

You can use BOQ’s Loan Repayment Calculator to calculate how your repayments may change.

For our existing home loan customers currently on a fixed rate, your loan repayment amount will not change for the duration of the period you have chosen to fix the rate of your loan.

BOQ applies a number of 'tests' when assessing customers' ability to repay a loan.  

These ‘tests’ include consideration of potential movements in interest rates over the life of the loan and evaluate a customer’s living expenses against their income.

Along with requirements by Australia’s banking regulators, these 'tests' are put in place to assess if a customer can still meet repayments in a higher interest rate environment before approving a loan. 

We’re here to help. If you are having trouble making loan repayments, the best thing you can do is get in touch with our Customer Assistance Team as soon as you can once you know what your new repayments are.

You can find further details on our Financial Difficulty Assistance page.

The Australian Banking Association’s Financial Assistance Hub is also an excellent resource to help you understand the options that may be available if you are in financial difficulty.