RBA rate cuts in 2025 – what they mean for Australian borrowers
Where the cash rate sits now
The Reserve Bank has already eased twice in 2025—cutting the cash rate from 4.35 % to 4.10 % on 18 February and then to 3.85 % on 20 May, the lowest level in two years. When the Board met again on 8 July it held at 3.85 %, stressing that further easing is a matter of timing, not direction.
Why the RBA is easing
Inflation has slipped back inside the 2–3 % target band, unemployment has jumped to 4.3 % (the highest since 2021), and consumer confidence remains weak as cost-of-living pressure bites. With growth soft and prices moderating, the Bank sees room to support the economy without reigniting inflation.
Will there be more cuts this year?
Most economists still expect at least one cut at the August meeting and possibly another in November. Westpac tips the cash rate to finish 2025 near 3.10 – 3.35 % and slide toward 2.85 % by mid-2026 if inflation keeps easing. A larger 0.50-point “catch-up” cut in August is on the table, but that hinges on the quarterly CPI due 30 July.
How a 0.25 % cut hits your repayments
On a $600,000 variable mortgage over 25 years, payments have already fallen from about $3,200 a month (4.10 %) to roughly $3,118 (3.85 %), saving about $83. Another 0.25 % cut would drop them to around $3,036, trimming a further $82. These figures are illustrative but show how quickly small moves add up over a loan term.
What homeowners and buyers should do now
Review your rate promptly because banks don’t always pass on cuts in full; compare rival offers, as refinance cash-backs can magnify the benefit; keep repayments at the old level if you can to knock down principal faster and build a buffer; and secure pre-approval early because lower assessment rates can boost borrowing power but lending policy still varies by bank.
How Money Wise Lending can help
Our brokers track every lender’s moves in real time. We can negotiate sharper discounts with your current bank or secure a refinance that passes on the full cut, structure split loans so part of your debt benefits from each reduction while another part is hedged, and provide borrowing-power calculations based on the latest assessment rates so you can act with confidence. Book a five-minute call and we’ll model the savings specific to your loan.
General information only. It doesn’t take your objectives, financial situation or needs into account. Consider seeking independent advice before acting on this content.
