RBA Cuts Cash Rate to 3.60% – What It Means for Your Mortgage Repayments
Borrowers across Australia have received some welcome news, with the Reserve Bank of Australia (RBA) cutting the cash rate by 25 basis points to 3.60%. This is the third RBA rate cut in 2025, aimed at easing cost-of-living pressures and providing mortgage holders with a little more breathing room.
RBA Governor Michele Bullock said the Board decided unanimously to trim rates as inflation continues to move closer to the RBA’s 2-3% target range. You can read the full RBA media release here.
How much could your mortgage repayments drop?
If you’re on a variable rate home loan, your bank may soon pass on the cut to your mortgage repayments. Here’s what the 0.25% cut could mean:
$500,000 loan (25 years, principal & interest): repayments down by about $76 a month – saving $912 a year.
$750,000 loan: repayments down by around $114 a month – saving $1,368 a year.
$1 million loan: repayments down by about $152 a month – saving $1,824 a year.
These savings only apply if your lender passes on the full cut. Some banks reduce interest rates but keep repayments the same, which means you pay off your loan faster. If you’d prefer lower monthly repayments, you can ask your lender to adjust them. To see how rate changes affect your repayments, try the Moneysmart mortgage calculator.
What should homeowners do next?
Even with this latest interest rate cut, many households are still under pressure from rising living costs. If your mortgage is feeling unmanageable, it may be a good time to explore your options, such as:
Checking if your lender has passed on the full RBA cut
Renegotiating your home loan to get a better deal
Refinancing with another lender through a home loan comparison site
Debt consolidation to make repayments more manageable
A quick home loan health check could help you reduce your financial stress and free up more money in your budget.
Final word
The RBA’s cash rate cut to 3.60% is a positive step for borrowers, but it may not be enough on its own. To get the best out of this change, stay informed about your lender’s response and consider whether refinancing or restructuring your mortgage could save you more in the long run.