The RBA Has Cut Rates—What Does It Mean for You?
Exciting news for borrowers—the Reserve Bank of Australia (RBA) has cut the cash rate by 25 basis points to 4.10%. How much could this save you on your mortgage repayments and will more cuts follow? Once the initial excitement settles, here’s what you need to know when interest rates head south.
This is the first RBA rate cut since November 2020, when rates were slashed to 0.10% in response to COVID-19. Since then, homeowners have endured 13 consecutive rate hikes as the RBA worked to bring inflation under control.
But there’s some good news. According to RBA Governor Michele Bullock, inflation is easing faster than expected, with December quarter data showing underlying inflation at 3.2%.
“There has also been continued subdued growth in private demand and wage pressures have eased,” Governor Bullock said.
“These factors give the Board more confidence that inflation is moving sustainably towards the midpoint of the 2–3 per cent target range.”
How Much Could Your Mortgage Repayments Drop?
If you’re on a variable-rate home loan, hopefully, your lender will pass on the full 0.25% rate cut. Here’s what that could mean for your monthly repayments:
$500,000 loan – repayments could decrease by around $77/month ($924/year).
$750,000 loan – repayments could drop by approximately $115/month ($1,380/year).
$1 million loan – repayments could go down by about $154/month ($1,848/year).
This all assumes your bank passes on the full rate cut—and after so many rate hikes, they should. There will likely be public and government pressure on lenders to do the right thing, especially with a federal election looming.
Will Your Lender Actually Lower Your Repayments?
Here’s something many borrowers don’t realise: not all lenders automatically reduce your repayment amount when interest rates drop.
Some will keep your monthly repayments the same—meaning you’ll simply pay off more of your principal. If you’d prefer to reduce your repayment amount, you may need to request the change.
To find out what your lender is doing with your loan, get in touch with us in a few days once the dust has settled.
How Low Could Interest Rates Go in 2025?
While the rate cut is welcome news, the big question is: will there be more rate cuts this year?
The RBA hasn’t given any clear signals yet, but here’s what economists at the big four banks are forecasting:
NAB: Cash rate falling to 3.10% by February 2026 (four more cuts)
CBA: Cash rate falling to 3.35% by December 2025 (three more cuts)
Westpac: Cash rate falling to 3.35% by December 2025 (three more cuts)
ANZ: Cash rate falling to 3.85% by August 2025 (one more cut)
Worried about your Mortgage? Let’s Chat.
Even with this latest cut, plenty of households are still feeling the squeeze of high interest rates and rising costs of living.
If that sounds like you, and you haven’t had a home loan health check in a while, now’s the time. We can help you explore options like:
Some options we can explore include:
Renegotiating with your current lender to secure a better rate
Refinancing to another lender for a more competitive deal
Debt consolidation to simplify your repayments
Every household is different—and we’d be happy to help you come up with a tailored plan for yours. Get in touch today!
Disclaimer: This article provides general information and should not be considered financial or tax advice. It does not take into account your personal circumstances. Always seek professional advice before making financial decisions. This content is protected by copyright laws and cannot be modified, reproduced, or republished without prior written consent.
