1. Cash Rate vs Home Loan Rate vs Long Term Interest Rate
Rate setting
The relationship between the cash rate and home loan interest rate in Australia's history is complicated if you want to know every minor detail. If you want to you can review the decisions made by the RBA every month since the end of the 1980’s. https://www.rba.gov.au/statistics/cash-rate/
Overall, the relationship has been quite consistent over the journey in a linear graph sense, however, there have been periods of time where the gap between the cash rate and home loan interest rates has been outliers. For example, on the high end of the scale, during the late 1980s and early 1990s, the cash rate reached a peak of 17.5 in April 1990, while the average standard variable home loan was slightly lower but very close behind, reaching a peak of 17% in 1990. https://www.rba.gov.au/publications/annual-reports/rba/1989/fin-markets-bank-operations.html
More recently and up until the low point where the Reserve Bank of Australia reduced the cash rate to a historic low of 0.10%, banks reduced home loan interest rates to premium borrowers to just below 2%. The average home loan was still roughly 2.3% above cash rate at 2.4%.
And the last item to understand is in the last decade a general rule of thumb for the best interest rates offered in the market were roughly the BBSW1m + 2% margin (BBSW - Bank Bill Swap Rate). https://www2.asx.com.au/connectivity-and-data/information-services/benchmarks/benchmark-data/bbsw
BBSW1m is the market data point used to price notes in the multi-trillion dollar international residential mortgage backed securities (RMBS) market - where mortgages are sold to investors locally and abroad but still managed by the initial loan writer for the most part, or the market where banks offload their risk and turn mortgages into derivatives.
Australia's Long Term Interest Rate in Feb 2023 was 3.71%. Slightly above the 3.60 cash rate. And in March dropped back to 3.47%. This live data point in comparison to the cash rate is a good viewing for market sentiment of future cash rate moves and a weblink to keep an eye on. https://www.ceicdata.com/en/indicator/australia/long-term-interest-rate#:~:text