It is often interpreted that lenders align their interest rates against the Reserve Bank Cash Rate. The Reserve bank Cash Rate is regarded as the Interbank Lending Rate.

To simplify, the RBA rate, also referred to as the Discount Rate, is the rate of interest which the central bank charges on the loans and advances to a commercial bank. The bank rate is known by a number of different terms depending on the country in question. It has changed over time in some countries as the mechanism used to manage the Discount Rate.

Whenever a bank has a shortage of funds, they can typically borrow from the central bank based on the monetary policy of the country. Although recent reports indicate the banks will raise Mortgage Interest Rates, it is quite clear that the RBA Cash Rate bears minimal comparison to the Lenders Mortgage Rate.

The major banks hold approximately 80% of the Residential Mortgage Market and therefore, it could be assumed that they have a greater control of market mortgage rates. This has brought about alternatives to seeking home loan lending through the major banks and that is now evident with an increasing number of residential loans being provided by mortgage originators and managers.

As a progressive and innovative provider, Flakus and Associates has access to these alternative funders.