The RBA has reduced the official cash rate by 0.25%, bringing it down to 4.10% in February 2025. If you’re wondering how this affects your mortgage, here’s what you need to know.
1. How Soon Will Banks Pass on the Rate Cut?
Most major lenders have announced their plans to pass on the full 0.25% cut, but the timing differs. Below is a table of the top 10 banks ranked by customers and when they will apply the rate cut.
Note: RateUnity’s new 5.39% variable rate for loans under 60% LVR will be available from March 3rd. Our investment loan rates start at 5.54%.
2. Will My Repayments Drop Automatically?
Banks will generally lower your minimum required repayment, but this does not always happen automatically. Some lenders require you to opt in.
What if I keep my repayments the same?
If you continue paying at the higher rate, you can pay off your mortgage faster and save on interest.
💡 Tip: Consider keeping your repayments the same to get ahead on your mortgage without extra effort.
Example for a $624,000 loan
Current rate: 5.64% → New rate: 5.39%
Monthly repayment: $2,933 → $2,803
If you keep your repayment at $2,933:
✔ Save $83,371 in interest over the life of the loan
✔ Pay off your mortgage 23 months (almost 2 years) earlier
3. When Is the Next Rate Cut Expected?
The RBA meets eight times a year to review interest rates. The next meeting is on April 1, 2025. While some analysts expect further cuts, the RBA will decide based on inflation and economic growth.
📌 Key Takeaways:
✔ Most banks are passing on the full rate cut by early March.
✔ Your repayments may not automatically drop—check with your bank.
✔ Keeping your repayments the same could save $83,371 in interest and cut almost 2 years off your mortgage.
✔ The next RBA decision is on April 1, 2025.
Written by Pier Culley 25/2/25.