Borrowers around the country have been delivered a sunnier financial outlook this month after the Reserve Bank of Australia (RBA) today trimmed the cash rate by another 25 basis points to 3.60%. How much could your monthly mortgage repayments decrease?
After last month’s unexpected hold, the RBA this month went with market expectations and delivered its third cash rate cut in 2025 in an attempt to ease cost-of-living pressures on Australian families.
RBA Governor Michele Bullock said in a statement that the Board unanimously decided to cut the cash rate by 25 basis points as underlying inflation continued to decline back towards the midpoint of the 2-3% target range.
Unless you’re on a fixed-rate mortgage, hopefully your bank will soon follow the RBA’s lead and decrease the interest rate on your variable home loan.
For an owner-occupier with a 25-year loan of $500,000 paying principal and interest, this month’s 25 basis point rate cut means your monthly repayments could decrease by about $76 a month.
That would put $912 a year back into your household budget.
If you have a $750,000 loan, your monthly repayments will likely decrease by about $114 a month – or $1368 per year.
Meanwhile, a $1 million loan could decrease by about $152 a month – or $1824 a year.
This all assumes that your lender automatically passes on the full 25 basis point cut to your home loan.
Another thing to consider is that not all lenders automatically reduce variable home loan repayment amounts in line with rate cuts.
Some lenders simply maintain your repayment amount at the old level. It’s just that more of your money goes towards paying off the principal (rather than the interest) each month. But you can ask them to reduce your repayments in line with their cuts.
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.
Even with this latest rate cut, many Australian families are still grappling with living costs and interest rates that are higher than when they first took out their home loan.
If that includes you, now could be a good time to check in with us for a home loan health check.
You might be able to improve your situation by either renegotiating with your current lender, refinancing to another lender, or through debt consolidation.
Whatever your situation, we’re here to help you explore your options.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to your circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Paul da Silva
Director & Senior Mortgage Advisor
