The Reserve Bank cut the cash rate by 25 basis points in February 2025 and again in May.
February 2025 marked the first rate cut since November 2020. Lenders responded almost immediately by announcing cuts to their home loan (and savings) rates.
Almost every lender in Australia passed on the full 25 basis points cut to its customers.
The most notable exception was Virgin Money, which told its customers it would be holding rates in place despite the cut.
The RBA cut the cash rate again in May. Once again almost every lender announced a full cut, including Virgin Money.
If you have a home loan and your lender passes on the cash rate cut, you stand to save a fair bit of money. Finder analysis suggests the average borrower will save at least $100 a month in lower home loan repayments.
Use Finder's rate change calculator to see how much a 25 basis point cut can save you.
Here are some examples with different loan sizes. We've assumed a 30-year term in each scenario, and used a fairly typical rate of 6.15%, with a 25 basis point cut to 5.90%.
| Loan amount | Monthly repayments at 6.15% | Monthly repayments at 5.90% | Monthly saving | Annual saving |
|---|---|---|---|---|
| $600,000 | $3,656 | $3,556 | $100 | $1,200 |
| $800,000 | $4,874 | $4,746 | $128 | $1,536 |
| $1,000,000 | $6,093 | $5,932 | $161 | $1,932 |
| $1,200,000 | $7,311 | $7,118 | $193 | $2,316 |
Banks and lenders also cut rates on high interest savings accounts when the cash rate falls. Many banks have already passed on the February cut to savers.
In the days following an RBA rate cut decision, Australia's banks and lenders cut interest rates on their variable rate home loans.
Banks also lower interest rates on their high interest savings accounts, meaning people with savings accounts earn less interest.
Some lenders even cut rates on the same day. But more often banks take a few days to make a decision and then implement the lower interest rates a week or two after the RBA's decision.
No. Most of them do, but banks and lenders can do whatever they like really. Some banks pass on a full cut, others may cut by slightly less.
Some lenders cut their rates for new borrowers but keep existing borrowers on their old, higher rates.
Home loan borrowers and first home buyers will be breathing a sigh of relief after the RBA announced a cut to the cash rate for the second time this year.
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The Reserve Bank of Australia (RBA) will meet on Tuesday 20 May to decide the cash rate. Most experts predict there will be a cut and some even think there will be a large 0.50% cut.
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Major bank NAB has doubled down on its prediction for a 0.50% rate cut in May.
Read more…Confused by this RBA thing everyone keeps talking about? Don't worry, we can explain all the key terms for you in under 200 words:
The RBA meets throughout the year to set the cash rate target. Before each meeting Finder surveys over 40 economists and experts and asks them to predict the cash rate decision.
RAMS are not shown in your list of banks that have already / are yet to pass on the RBA rate cut. Would be great if you could please also add them into the list. Whilst I know they are no longer doing new home loans, there are still a lot of us that have current home loans with them. Thanks.
Hi Leisa,
Thanks for getting in touch. We’ve decided to only list active lenders in this table. RAMS and other inactive lenders with existing customers often don’t provide much public information, so it’s hard to monitor rate movements.
Is Liberty Financial passing on the rate cut? I noticed they’re not on the list.
We haven’t seen an announcement from Liberty about any rate cuts – many of its rates are customised for individual borrowers so that’s not entirely surprising.
I was wondering if you could do an investigation regarding the situation with savings account when rates move. once again, rates have fallen for the first time and a couple of my banks have already done the usual. Mebank have lowered the savjngs rate by 0.25% immediately but they are not changing home loan rates until the 8th of March. they also lowered the rate in November last year by 0.3% even though rates didn’t move! Virgin money have lowered their savings rate by 0.35% straight away. Amp have already lowered their savings rate but have they moved the home loan rate? when rates were going up banks were delaying savings rates changes (or only raising them by small amounts). Amp took 2 months each time to raise rates but instantly lowered them. It would be great to have stories about savers losing out all the time while banks continue to make massive profits. Why do governments go after supermarkets about ripping off customers but banks just get to go on doing it.
Hello Andrew,
This is something we are looking to analyse using rate data. Banks frequently cut savings rates immediately and wait a week or two to lower variable home loan rates. Banks are under no obligation to pass rate cuts on (for home loans or savings accounts) as they can set rates however they like.
These days government figures sometimes exert pressure on banks in the media (urging them to pass cuts on to borrowers, for example). But to my knowledge there’s never been any proposal to push banks to give consumers a better deal through regulation/legislation.
One thing ordinary consumers can do is vote with their feet and move to banks that offer better rates for savers and lower rates for borrowers.