RBA Cuts Interest Rates: What It Means for Your Mortgage
Finally, some relief for borrowers! The Reserve Bank of Australia (RBA) has cut the cash rate by 25 basis points, bringing it down to 4.10%. This marks the first rate cut since November 2020, when the RBA slashed rates to an all-time low during the COVID-19 crisis.
With 13 consecutive rate hikes behind us, this move signals a shift in the RBA’s strategy as inflationary pressures ease. But how much will this cut reduce your mortgage repayments? And can we expect more cuts in 2025?
Why Did the RBA Cut Rates?
RBA Governor Michele Bullock explained that inflation is slowing faster than expected, citing December quarter data that showed underlying inflation at 3.2%.
“There has also been continued subdued growth in private demand and wage pressures have eased. These factors give the Board more confidence that inflation is moving sustainably towards the midpoint of the 2–3% target range.” – RBA Governor Michele Bullock
This shift in economic conditions has given the RBA more confidence to ease borrowing costs, potentially creating opportunities for homeowners and investors alike.
How Much Will Your Mortgage Repayments Decrease?
If you have a variable-rate home loan, you could soon see savings in your monthly repayments—provided your bank passes on the full rate cut.
Here’s what a 25-basis point cut could mean for your loan repayments:
💰 $500,000 loan (25-year term) → Save $77 per month ($924 per year)
💰 $1 million loan → Save $154 per month ($1,848 per year)
However, not all lenders automatically lower repayment amounts. Some may keep repayments the same while allocating more of your money toward paying down principal rather than interest. If you want your repayments reduced, you may need to contact your lender and request an adjustment.
📞 Not sure what your lender is doing? Let’s find out together! Book a free consultation
Will There Be More Rate Cuts in 2025?
There are still seven more RBA meetings this year, and while the board hasn’t confirmed further cuts, major banks have made their cash rate predictions:
🔹 NAB → Cash rate to fall to 3.10% by February 2026 (four more cuts)
🔹 CBA → Cash rate to fall to 3.35% by December 2025 (three more cuts)
🔹 Westpac → Cash rate to fall to 3.35% by December 2025 (three more cuts)
🔹 ANZ → Cash rate to fall to 3.85% by August 2025 (one more cut)
If inflation continues to trend downward, we could see further rate cuts later this year, providing additional relief for mortgage holders.
Still Feeling the Pinch? Let’s Review Your Home Loan
Even with this latest rate cut, many Australian households are still facing cost-of-living pressures and high interest rates. If you haven’t reviewed your home loan in a while, now is the time to check if you could be on a better deal.
✅ Renegotiate with your current lender for a lower rate
✅ Refinance to a new lender with better terms
✅ Consolidate debts to reduce financial strain
Every household is different, and at Clark Finance Group, we’re here to help you find the best mortgage strategy for your situation.
📞 Let’s talk! Book a free home loan review today
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