Interest rate reductions are finally coming for mortgage holders as the Reserve Bank of Australia (RBA) announced a reduction of 0.25% to the cash rate at their February meeting.

This is the first change to the cash rate since November 2023 when the rate hit a 13 year high following 13 increases between May 2022 to November 2023.

Simplified, the cash rate is the interest rate that the banks pay to borrow money that they then lend to home owners.

When will interest rates go down and by how much?

The expectation is that the lenders will pass on the full 0.25% decrease to their customers on a variable rate home loan however, that is yet to be confirmed by each of the individual lenders.

The lenders are under no obligation to pass on all or any of the rate reduction but given the current high cost of living and mortgage stress that many home owners have endured, lenders would face significant backlash if they decide not to pass on the full reduction.

During the period of rate increases between 2022 to 2023, most lenders responded within one week, announcing their rate increases. We will keep the list below updated as each lender announces changes to their rates.

How much will I save on lower interest rates?

Mortgage owners on a fixed rate home loan will see no change to their interest rate or  repayments until their fixed period ends. For those on a variable interest rate, a decrease of 0.25% on a $500,000 home loan over 25 years would result in a monthly repayment decrease of $78.

Will there be further interest rate cuts to come?

The next RBA meeting will be held on 31 March & 1 April with the likelihood of a consecutive interest rate reduction unlikely at this point in time. Economists expect that the RBA will be conservative with further interest rate reductions to ensure the hard work in bringing inflation back to target is not undone. The big four banks have predicted a maximum of 2 to 4 rate cuts over the 2025 calendar year.

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Lenders response to the rate reductions‍