The Reserve Bank of Australia (RBA) reduced the Cash Rate by 0.25% to 4.10% on 18 February 2025.
Whether it is a political move or a financial one, it is a small relief for borrowers, but Governor Bullock warns that further rate cuts aren’t a certainty over the next few meetings, stating that if inflation doesn’t continue to trend down rates will be held for longer.
The market has also tempered its view on rate cuts only pricing in one more cut this calendar year with a third coming in February 2026.
Where do the Banks Stand on Rate Cuts?
Whilst all the major banks have announced they will be passing on the full cash rate cut of 0.25% between the 27th of Feb and the 4th of March, they remain divided on their opinion of following rate cuts:
-
ANZ: Only 1 more rate cut this year, down to 3.85%
-
CBA: 3 more rate cuts this year, down to 3.35%
-
NAB: 4 more cuts this year, down to 3.10%
-
Westpac: 3 More cuts, down to 3.35%
What Does This Mean for You?
It’s important to note that most banks will pass on the rate cut automatically, so keep an eye out for updates from your bank. However, most will not automatically reduce your minimum repayment and this will have to be done manually through your Lenders Online Banking or by calling them directly.
If you want to find out what your new minimum repayment is, please reach out and we can coach you through that conversation.
The following highlights the potential impact of the rate cuts on monthly repayments depending on the size of the loan:
How Will This Affect the Property Market?
With the housing market still soft in both Melbourne and Sydney, we are likely to see a lift in buyer confidence with buyers on average adding $13,000 to their maximum borrowing capacity, however experts argue this is not going to see any sort of “boom” in prices. More than likely, prices will stay flat for the time being, given the stock that has built up in the market.
In the commercial property space, we have already seen the BBSY fall ahead of the RBA decision, so lending in the commercial property space is likely to show some life with yields increasing. Coupled with a national and global push to get back into offices, we could see a revitalisation of the office and retail market which has remained weak since the beginning of COVID.
Your Next Move:
-
Keep an eye out for communications from your bank, noting the date of the interest rate reduction
-
Calculate your new monthly repayment and amend your home loan either in your online banking or by calling
-
Assess your new monthly budget/borrowing power to see if buying now is the right time for you
-
Request a further increase from your bank if you are unhappy with your current rate
-
Reach out to your broker to discuss potential refinancing, as another mortgage war is brewing—now is the time to take advantage.
At Moore Australia, our specialists have experience with clients working in a variety of industries providing business structuring, home and investment lending structuring and finance solutions. Contact your local advisor today to discuss your financial future.