The Reserve Bank of Australia (RBA) reduced the cash rate by a further 0.25% on Tuesday 20 May 2025, following a previous rate cut in February.
Many lenders have lowered their variable interest rates, making mortgage repayments lower. However, some lenders don’t always pass on savings right away.
Checking when your lender will pass on the interest rate cut could help you avoid unnecessary costs and pay off your loan faster. Here’s what you need to know.
Will your repayments automatically drop?
Not necessarily. Some lenders default to keeping repayments the same unless the borrower requests a change. This means your loan term may shorten instead of reducing your monthly repayment.
If you need to adjust repayments to help with the cost of living, you’ll need to contact your lender. Weigh up your options carefully and decide what will work best for you – lower repayments or paying off your loan faster?
Should you refinance for a better deal?
Shopping around for a better rate could save you thousands over time. Look for:
- Total loan cost (e.g. monthly cost, total cost over one to three years)
- Fees and flexibility (e.g. ability to make extra repayments, offset accounts)
Using a mortgage broker can be useful for comparing options.
You can also use our mortgage calculator to help compare interest rates and check if you’re getting the best deal. Even a small rate difference can mean big savings over the life of your loan.
For example, if you have a $500,000 mortgage with an interest rate of 6.00%, your current repayments are around $3,008 per month. If your interest rate was to decrease by 0.25%, it reduces your repayment to $2,928 per month, saving you around $80.
Work out your home loan repayments and compare different rates.