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The Reserve Bank of Australia (RBA) has announced another 0.25% cut to the official cash rate, bringing it down from 3.85% to 3.60%.
This is the third rate cut in 2025, following reductions in February and May, and comes as inflation continues to track within the RBA’s 2–3% target range.
Why the RBA Made the Move
Speaking on this month’s Property Insights before the decision, economist Stephen Koukoulas said that with inflation trending lower and economic growth still subdued, the case for another cut was strong.
In the lead-up to this meeting, Koukoulas noted that a significant portion of the data was pointing towards the need for the RBA to move again, with money markets and major bank economists expecting one more rate cut in 2025.
Bouris agreed, pointing out that, “both headline and trimmed-mean inflation was unbelievably good at the end of July.” Headline inflation came in at 2.1%, with the trimmed mean at 2.7%.
The RBA’s media release highlighted that today’s decision was “unanimous.”
“Headline inflation, which has partly been affected by temporary cost of living relief measures, was 2.1 per cent, also as forecast. Updated staff forecasts for the August meeting suggest that underlying inflation will continue to moderate to around the midpoint of the 2–3 per cent range, with the cash rate assumed to follow a gradual easing path,” read the Statement of the RBA.
Even though the RBA has been cautious between rate cuts, the combination of falling inflation and the broader economic outlook meant that the RBA “had to” cut rates in August according to Koukoulas.
With today’s announcement, the RBA Board has chosen to act rather than wait until its next meeting in September, providing further relief for borrowers.
Lender Competition Heats Up
The recent series of RBA rate cuts has sparked increased competition among lenders, with some fixed home loan rates now dipping into the 4 per cent range for the first time in years.
While these low fixed rates often come with specific terms and conditions, they can be an attractive option for borrowers looking for repayment certainty.
For variable-rate customers, this competitive environment is another reason to review your loan. Banks are actively vying for new customers, and in many cases, existing borrowers can secure a sharper rate simply by asking their lender or working with a mortgage broker to compare options across the market.
What Today’s Rate Cut Means for Your Mortgage
If your lender passes on today’s cut in full, your monthly repayments could drop again next month. Here is how each rate cut this year could impact monthly repayments showing the savings as a result of each rate cut:
| Loan Size | Impact of February 0.25% rate cut | Impact of May 0.25% cut (0.50%) | Impact of 3rd 0.25% rate cut (0.75%) |
|---|---|---|---|
| $500,000 | $81 | $161 | $256 |
| $750,000 | $122 | $242 | $384 |
| $1,000,000 | $162 | $322 | $512 |
| Source: Compare the Market. Calculations assume an owner-occupied loan with a variable interest rate of 6.3% that is reduced to 5.55% after three 0.25% rate cuts passed on in full by the bank. It assumes a 30-year loan term, with no ongoing fees. This does not take into account the reduction of the loan balance over time. |
Why This Matters for Borrowers
These reductions aren’t just good news for monthly budgets, they can also make a big difference to long-term interest costs.
Maintaining your home loan repayments steady at their pre-cut level is one of the most effective ways to pay off your loan faster.
If you can keep your repayments where they were before the cuts, you can knock years off your loan term and save thousands in interest over time.
How much can I borrow?
Use our home loan borrowing calculator to estimate how much you can afford to borrow.
Bouris says that now is a critical time to review your loan.
“In a rate-changing environment, it’s important to make sure you’re still on a competitive rate and that your loan structure works for you. Whether that means refinancing, consolidating, or just making small tweaks, a broker can help you navigate those options,” Bouris said.
What’s Next?
The next RBA meeting is scheduled for September 17. Between now and then, key data releases will shape whether the Board moves again.
In the meantime, today’s cut offers borrowers a chance to get ahead, build a buffer, or make strategic adjustments to their loan.
If you’d like to understand exactly how these changes affect you, or want to review your options, speaking with a mortgage broker can help you make the most of the current rate environment.
