The Reserve Bank cut the cash rate by a quarter of a percent, taking it to 3.60%: a clean 0.25% move and a clear signal that policy is shifting down after a long, grinding cycle of hikes and then a pause. We’ve all felt the tension around these meetings; last time it was a hold, this time it’s a cut. The relief in living rooms was real.
Why the Board moved
The short version? Inflation has been easing, and the Bank has been watching that trend closely. Through winter the conversation turned from “how long do we hold the brakes” to “when do we start to ease off.” Today was the answer. The logic is straightforward enough: prices are cooling toward the target band, demand has softened at the edges, and mortgage households have absorbed a lot. None of that is a victory lap; it’s the RBA judging that a measured step down now is consistent with keeping inflation on track while letting some pressure off borrowers. It’s a cautious move, not a free-for-all.
What the cut means in dollar terms
A 0.25% cut sounds small until you translate it into repayments. On a $600,000 home loan, the headline saving is roughly $89 a month once lenders pass it through. Stack the recent reductions together and you’re looking at about $272 a month in total relief this year, again subject to what your bank does on your product. These are TV-guide numbers, not lender policy, but they map pretty well to what we see when rates step down.
Two important caveats. First, banks don’t always pass on cuts in full across every product suite. Pricing teams juggle margins, funding costs and competition, and sometimes variable rates move unevenly. Second, the timing varies. You’ll see rate-change notices hit your inbox at different points over the next few weeks. If you’re on a package with multiple splits, check all of them — offsets, IO splits, the lot.
Capacity, confidence and the property market
Lower assessment rates usually nudge borrowing capacity up. One on-air back-of-the-envelope put it like this: a borrower on $100,000 income might be able to borrow around $11,000 more after the cut; someone on $50,000 might see about $4,000 more. Treat those as directional, not promises. Lender calculators still apply buffers and policy hurdles, and they differ wildly between banks. Even so, when capacity inches up and headlines turn positive, buyer intent tends to follow. In tighter suburbs that can support prices quickly; we’ve seen that playbook before.
What to do now (and what to avoid)
Start with the basics: confirm pass-through on your variable rate and note the effective date. If your bank moves late or short-changes you, ask for a repricing to current new-customer levels. Sometimes the quickest win is a quiet discount from your existing lender.
If you’re rolling off a fixed rate in the next 3–12 months, don’t set-and-forget. The path from here could be a slow easing cycle or a cut-and-pause; either way, it’s a good time to weigh options — stay variable for flexibility, refix a portion, or use a split to manage cash flow. The right answer depends on your income stability, buffers and plans over the next couple of years, not on anyone’s crystal ball.
For households under the pump, leave repayments where they are and let the lower rate do the work. That simple habit accelerates principal reduction and builds a buffer in your offset or redraw. It’s not glamorous; it works.
Investors should rerun interest coverage and cash-flow projections at the new rate, especially if insurance, strata and maintenance have crept higher. If the numbers are tight, treat today’s cut as breathing space, not an invitation to stretch.
And remember the un-fun part: fees and break costs still matter if you’re refinancing out of a fixed loan. We’ll put those on the table alongside any cashback carrots so you can see the true net position, not the marketing headline.
How we’ll help — the Rate Challenge
If your bank won’t sharpen your rate, we’ll run a Rate Challenge against 35+ lenders. That means we line up your current structure, repayments and fees against live pricing and policy, show the numbers clearly, and recommend one of two paths. If staying put with a sharper rate is best, we’ll say so and push the repricing through. If a refinance genuinely improves cost or structure, we’ll manage the move with minimal downtime. For standard home loans, we don’t charge a broker fee.
Bottom line
Today’s cut is welcome and warranted. It acknowledges that inflation is cooling while giving mortgage households a little room to breathe. The opportunity is real but it isn’t automatic: some banks will pass on the full 0.25%, some won’t, and the best deal on the market today may not be with your current lender. Don’t wait for a letter in the mail. Get a live read on your pricing, pressure-test it against alternatives, and turn the headline into a concrete saving.
If you want us to run the numbers, we’ll get started this afternoon. One quick Rate Challenge, and you’ll know where you stand.
