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The Reserve Bank of Australia (RBA) has officially cut the cash rate by 0.25%, bringing it down to 3.85%, marking the second cut this year and a clear signal that the central bank is shifting its focus toward supporting growth and easing pressure on borrowers.
So, what does today’s decision mean for homeowners, buyers, and investors? And what’s behind the RBA’s latest move?
Why the RBA Cut Rates Today
Today’s rate cut follows a string of positive inflation data and other measures, which have given the RBA enough confidence to take another step in easing monetary policy.
In the lead-up to the decision, economist Stephen Koukoulas said the case for a cut was strong:
“The inflation data that came out two weeks ago showed a 2.4% headline figure, and the trimmed mean at 2.9%. The run rate is converging to 2.5%, which is what the RBA will be happy about.”
The RBA had previously signalled it was watching closely for consistent progress toward its 2–3% inflation target, and today’s cut reflects growing confidence that inflation is under control and sustainably declining.
Despite the positive news, the RBA has maintained its cautious tone:
“The Board judged that the risks to inflation have become more balanced.”
“Inflation is in the target band and upside risks appear to have diminished as international developments are expected to weigh on the economy. With inflation expected to remain around target, the Board therefore judged that an easing in monetary policy at this meeting was appropriate.”
“The Board assesses that this move will make monetary policy somewhat less restrictive. It nevertheless remains cautious about the outlook, particularly given the heightened level of uncertainty about both aggregate demand and supply.”
What Today’s Rate Cut Means for Mortgage Holders
For those borrowers whose lenders pass the rate cut on in full, here’s what your monthly repayments could look like:
| Result of an 0.50% rate cut being passed onto to typical loans | ||
| Loan Size | New monthly repayment | Decrease in monthly Repayment |
| $500,000 | $3,164 | – $76 |
| $750,000 | $4,746 | – $114 |
| $1,000,000 | $6,328 | – $152 |
But here’s what’s interesting and different from previous rate cut cycles.
According to new AFR reporting, the vast majority of borrowers who benefited from the February cut chose to keep their repayments at the same level rather than reduce them.
That means they effectively used the rate cut to get ahead on their loan, not just ease cashflow.
“Since the February cut, ANZ said 7% of customers had opted to reduce their repayments. At NAB, only 3.8% of home loan customers have reduced their direct debit repayments following the February cut,” the AFR reported.
CBA revealed that just 14% of their home loan customers opted to reduce their monthly repayment off the back of February’s rate cut.
This is a powerful move, if at all possible, and one you might want to consider.
What Should You Do If You’re a Borrower?
With today’s rate cut now confirmed, you’ve got options. But before you race to lower your repayments, consider the bigger picture:
1. Keep repayments the same
If you can afford to, keeping your repayments steady allows you to pay off your loan faster and reduce interest costs over time. This strategy is particularly valuable while rates are still relatively high.
2. Use the savings to build a buffer
If you’re feeling the pressure of rising costs, you could redirect your rate cut savings into an offset account or high-interest savings account to build a buffer without locking up the funds.
3. Review your loan structure
With more rate cuts expected later in 2025, it might be time to check in with your broker about whether your current loan setup still suits your needs, especially if you’re on a fixed rate or recently came off one.
4. Compare rates across lenders
Not all lenders pass on rate cuts in full and not all loans are created equal. A 15-minute chat with a broker could be the difference between a good rate and a great one.
What It Means for Buyers and the Property Market
According to Cotality (previously CoreLogic), property prices nationally rose 0.7% in the first quarter of 2025, with renewed momentum in Sydney, Brisbane and Adelaide. Today’s rate cut is likely to boost buyer sentiment even further.
Two notable trends have appeared in Cotality’s research:
- Median income can no longer afford median house prices
- “Outer-suburban markets” are soaring in demand.
Cotality data confirms that “the nation’s strongest housing conditions are concentrated in the fringes of each capital city” (think 20km or so from CBD areas), which Cotality argues is a reflection of the “heightened demand for more affordable homes as buyers navigate continued serviceability constraints and stretched affordability metrics.
Research Directory Tim Lawless pointed out that buyers are simply making “pragmatic decisions” as home values continue to rise, and affordability is the key concern.
How much can I borrow?
Use our home loan borrowing calculator to estimate how much you can afford to borrow.
“Theoretically, “a household on a median income, with a 20% deposit, would need to dedicate just over half of their gross income to afford a median-priced home.”
“In practice, that’s pushing buyers further out, where homes remain comparatively affordable. The result is that we’re seeing outer suburban markets do much of the heavy lifting in terms of price growth.”
As Mark Bouris said on Property Insights this month:
“We’re seeing moderate gains, which suggests the market is stabilising. For buyers and investors, this is a time to be looking long-term, not worrying about short-term fluctuations.”
If you’re in the market, today’s decision won’t change things overnight, but it does create more favourable borrowing conditions, as lenders continue to compete for business by lowering new customer interest rates.
Whether you’re hoping to reduce your repayments, buy your first home, or simply stay ahead of the curve, the smartest thing you can do is get clarity on your options.
Talk to a Mortgage Broker Today
A quick check-in could help you:
- Refinance to a more competitive rate
- Optimise your repayments
- Explore how today’s cut affects your borrowing capacity
- Prepare for more potential rate changes this year
Contact us today to speak to our home loan experts and find out how you can make the most of a falling rate environment.
