Banks To Pass On Full 25-Basis-Point Rate Cut – What It Means For You

The long-awaited relief for mortgage holders has finally arrived. Following the Reserve Bank of Australia’s (RBA) recent decision to cut the official cash rate by 25 basis points, major banks have confirmed they will pass on the reduction to borrowers.

A Much-Needed Rate Cut After Four Years

On Tuesday, 18 February 2025, the RBA lowered the cash rate from 4.35% to 4.10%, marking the first rate cut in four years. This move comes as inflation shows signs of stabilising and economic conditions remain under close watch.
In response, several lenders quickly announced reductions in their home loan variable rates, providing much-needed relief to mortgage holders who have endured a prolonged period of high rates.

How The Big Banks Are Responding

Commonwealth Bank of Australia (CBA)

CBA has confirmed that it will reduce home loan variable interest rates by 0.25% p.a. starting from 28 February 2025.

National Australia Bank (NAB)

NAB has announced a 0.25-point cut to its standard variable home loan interest rate, starting from 28 February 2025.

Westpac

Westpac will implement its 0.25% p.a. rate cut from 4 March 2025. In addition to the interest-rate changes, the bank has introduced a new feature allowing eligible home loan customers to set up multiple offset accounts without extra fees, giving borrowers more flexibility in managing their finances.

ANZ

ANZ has confirmed that it will reduce variable interest rates for home, residential investment, and line of credit loans by 0.25% p.a. starting from 28 February 2025.

What This Means For You

Good News for Borrowers

For homeowners with a $500,000 mortgage, a 25-basis-point rate cut could translate to savings of around $90 a month, or $1,080 a year – a welcome reduction in household expenses. Borrowers may choose to:

• Lower their monthly repayments
• Make extra payments to pay off their loan faster
• Use offset accounts to further reduce interest costs

A Mixed Bag for Savers

While borrowers benefit, savers may feel the pinch. Some savings accounts and term deposits will earn a lower interest rate, though banks have committed to keeping competitive savings options available.

What’s Next?

With inflation stabilising and the RBA closely monitoring economic conditions, this may not be the last rate cut of the year. Experts will assess the impact on housing affordability, consumer confidence, and economic growth.

For borrowers, this could be the perfect opportunity to review home loan options, refinance, or take advantage of better terms.

If you’re seeking a competitive rate or considering refinancing, feel free to contact our experts for personalised assistance. Call us on 1300 889 743 or fill in our free assessment form, and one of our specialist mortgage brokers will discuss your situation with you in detail.