The Reserve Bank of Australia (RBA) has officially lowered the cash rate target by 25 basis points, bringing it down to 4.10%.
This long-anticipated cut is set to impact Australian homeowners, home loans, and mortgage repayments across the country. But what does this decision mean for borrowers, and how soon will lenders pass on the savings?
Let’s break it all down—how this rate cut affects you when you can expect changes to your mortgage, and what you should do next to make the most of it.
What an RBA interest rate cut means for you
With the official cash rate now sitting at 4.10%, Australian homeowners with variable-rate home loans could see lower monthly repayments—but not immediately. While the major banks are expected to pass on the rate cut, history shows that each lender moves at its own pace.
Lower interest rates can mean:
✅ Reduced mortgage repayments (once passed on by your lender)
✅ Increased borrowing power for new home buyers
✅ Potential relief for households struggling with cost-of-living pressures
However, it’s important to understand how and when this will actually affect your finances.
When will banks pass on the interest rate cut?
Following the RBA’s decision, some major banks have already announced when they will lower rates:
Commonwealth Bank (CBA): Variable home loan rates will decrease by 0.25% p.a., effective 28 February 2025.
Westpac: Will reduce variable home loan rates by 0.25% p.a., effective 4 March 2025.
Other banks are expected to make announcements soon, but based on past trends:
ANZ has historically been the fastest, averaging 9 days before passing on cuts.
NAB follows at 12 days.
Westpac has taken around 16 days (which aligns with their latest announcement).
CBA has previously been the slowest, averaging 18 days, but this time they’re implementing the change in 17 days.
Keep an eye out for further updates from ANZ, NAB, and other lenders.
If your bank hasn’t made an announcement yet, expect to hear from them within the next few days regarding when the new rates will apply. Alternatively, get in touch with your mortgage broker.
Why do banks delay interest rate cuts?
Banks strategically time rate adjustments to manage their profit margins. While they often move quickly to increase rates when the RBA hikes the cash rate, they tend to take longer to reduce rates when cuts are announced.
What this means for you:
Monitor your lender’s announcements to see when they pass on the rate cut.
Consider refinancing if your lender is slow to reduce rates and better deals exist elsewhere.
Will your minimum mortgage repayments change automatically?
Not necessarily. While the interest rate will drop, this doesn’t mean your minimum monthly repayments will automatically decrease.
Even if your bank reduces interest rates, your minimum monthly repayments might not change automatically. Many lenders require borrowers to request a repayment adjustment.
Most banks will offer two options:
🔹 Keep your repayments the same (helping you pay off your loan faster)
🔹 Reduce your monthly repayments (freeing up cash flow)
If you want to adjust your repayments, you may need to contact your lender or mortgage broker to make the change.
What should homeowners do now?
Check when your Bank’s rate cut takes effect.
If your lender hasn’t announced a change yet, watch for updates in the coming days.
Consider keeping your repayments the same.
If you can afford to, keeping repayments at their current level allows you to pay off your mortgage faster, reducing overall interest costs.
Review your home loan rate.
This is the perfect time to compare your mortgage rate with others on the market. If your lender is slow to pass on cuts, refinancing could save you thousands.
Plan for future interest rate changes.
While this rate cut is good news, it’s essential to be financially prepared in case interest rates change again later this year.
How this impacts first-home buyers
For first-home buyers, lower interest rates can increase borrowing power, making it easier to qualify for a home loan. However, with property prices still high in many areas, it’s essential to assess your financial position before jumping into the market.
How much could you save with a rate cut?
The impact of an interest rate cut depends on your loan size and how much the rate decreases.
For example, if you have a $600,000 mortgage on a 25-year loan term:
A 0.25% rate cut could save you around $84 per month.
Over time, these savings add up to thousands of dollars.
Even if the savings seem small, keeping your repayments unchanged means you’re paying down your mortgage faster.
Should you consider refinancing?
If your lender is slow to pass on an interest rate cut or you’re still on a high-interest home loan, refinancing could be a smart move.
When to refinance your home loan:
✅ Your interest rate is higher than the market average.
✅ Your lender is slow to pass on RBA rate cuts.
✅ You want to switch to a loan with better features (offset account, redraw facility, etc.).
✅ You’re paying high fees that could be reduced elsewhere.
How to Refinance Effectively:
Compare interest rates across multiple lenders.
Check for hidden fees and refinancing costs.
Speak to a reputable mortgage broker such as Fync to find the best option based on your financial situation.
With competition between lenders increasing, you may be able to secure a lower rate, better loan features, and potential cashback offers by switching.
What’s next for interest rates?
This rate cut signals a shift in the RBA’s approach, but it's unclear whether more cuts will follow. The RBA will continue to monitor inflation, employment, and economic growth, adjusting rates accordingly.
For now, Australian homeowners should take this opportunity to review their home loans, shop around for better rates, and make informed financial decisions.
Key takeaways for Australian homeowners
✅ Interest rate cuts bring savings, but banks take time to pass them on.
✅ Monitor your lender’s response to ensure you’re benefiting from rate reductions.
✅ Be proactive – request lower repayments or consider refinancing if your rate is too high.
✅ Keeping repayments steady after a rate cut can help you pay off your mortgage faster.
✅ Seek expert advice if you’re unsure how to navigate rate changes effectively contact Fync.
How Fync can help you navigate interest rate changes:
At Fync, we’re committed to helping Australians make informed financial decisions, whether you're navigating home loans, interest rate changes, or refinancing options. With expert guidance and transparent advice, we help you stay ahead of market shifts and ensure your mortgage strategy aligns with your financial goals.
If you're considering refinancing, reviewing your loan structure, or simply want to explore your options, our experienced team is here to assist.
Visit the Fync website today to learn more and take control of your financial future.
*Disclaimer: Please note that the information provided in this communication is for general informational purposes only and should not be construed as professional advice. It is not intended to substitute for personalised financial, legal, or tax advice. Please consult a qualified professional before making any decisions based on the information provided.