Home loan rates from lenders are indicative of what it costs them to borrow money to lend, combined with a small margin to help them provide for the running cost of their services and make some profit. The Reserve Bank of Australia sets the cash rate that is a broad indicator of the state of the Australian economy.

Strictly speaking, these two rates are largely independent, as many lenders actually source a proportion of their funds from offshore sources and the cost of doing that can also dictate the rates they offer on home loan products.