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Cash rate holds, but switching hack could save borrowers over $220k interest
30 Sept 2025
The RBA has kept the cash rate on hold at 3.60%, following higher-than-expected CPI figures last Wednesday.
The Board, in its statement, said the economy was strengthening and that the labour market was relatively steady, providing no pressing need for a cash rate cut.
New analysis from Canstar shows that instead of waiting for further relief from a cash rate cut, a borrower with a $600,000 mortgage, who hasn’t renegotiated their rate since the start of the rate hikes (May 2022), could see their monthly repayments drop by $403 by refinancing to a competitive rate of 5.25%.
However, if this borrower continued to pay the same amount as they did on their previous loan, they could potentially save $225,620 over the life of their mortgage and pay it off 5 years and 3 months early.
This assumes the borrower continues to make these higher repayments for the remainder of their loan, that there is one more cash rate cut mid-next year, as forecasted by NAB, and that the cash rate remains at the neutral rate of 3.35% thereafter. It also factors in $1,150 in switching costs.
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| Potential impact from refinancing a $600k home loan and making higher repayments | |||
|---|---|---|---|
| Monthly repayments | Cost – life of loan | Time taken to repay loan | |
| Complacent borrower | $3,999 | $573,114 | 25 years |
| Refinance plus keep higher repayments | $3,999 | $347,494 | 19 years, 9 months |
| Difference | $0 | -$225,620 | 5 years, 3 months |
Source: Canstar. Notes: calculations are based on an owner occupier with a $600k debt and 25 years remaining. The complacent variable borrower rate assumes the person has not renegotiated their rate since May 2022. Costs include $1,150 in switch costs but not ongoing fees and that variable rates change in line with NAB’s cash rate forecast.
Canstar’s data insights director, Sally Tindall says, “It’s little surprise the RBA has kept the cash rate on hold. The task at hand for the central bank is to stabilise prices and protect jobs. There was no way the Board could justify a cash rate cut when a number of inflation indicators were back on the rise.”
“With the economy picking up pace and the unemployment rate holding steady, the RBA has shifted back into a holding pattern, while it waits for the next round of quarterly inflation data.
“However, just because the RBA is treading water, doesn’t mean borrowers have to.
“A complacent owner-occupier who hasn’t refinanced their mortgage recently is sitting on a rate of around 6.36 per cent. If they switched to a competitive rate of 5.25 per cent on a $600,000 debt and 25 years remaining they could put $403 a month back in their pocket.
“For some families, that $403 a month isn’t about getting ahead on the mortgage, it’s about keeping the household budget afloat. It’s money that can go towards the weekly grocery shop, paying down bills or covering the rising cost of raising kids.
“But for those that can, the real secret is to keep your repayments the same. On a $600,000 loan, paying an extra $403 a month could potentially shave more than $220,000 off your interest bill and knock over five years off a 25-year loan.
“Refinancing does involve some paperwork, which can be a turnoff, but the numbers show it’s a game-changer.
“Instead of waiting for the RBA to cut again, borrowers can take control of their mortgage. The only guaranteed rate cut at this point is the one you secure yourself.”
This article was reviewed by our Finance Editor Jessica Pridmore before it was updated, as part of our fact-checking process.
