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Rate relief from today, yet millions will now make higher repayments instead
22 Aug 2025
Millions of Australians with a CBA or ANZ variable home loan will see their interest rate drop today by 0.25 percentage points on the back of last week’s RBA decision.
CBA has also today cut its fixed home loan rates, taking its lowest fixed rate to the same rate as its new lowest variable at 5.34%.
NAB and Westpac variable home loan customers will have to wait until next Monday and Tuesday (25 and 26 August) respectively for their rate cut to kick in.
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| Big bank lowest rates vs market leader | ||
|---|---|---|
| Lowest variable | Lowest fixed rate | |
| CBA | 5.34% | 5.34% for 3 yrs |
| Westpac | 5.34% | 5.59% for 2 yrs |
| NAB | 5.69% | 5.19% for 2 yrs |
| ANZ | 5.50% | 5.19% for 2 yrs |
| Lowest in market | 4.99% | 4.69% for 2 yrs |
Source: Canstar. Note: rates are for owner-occupiers paying principal and interest. *NAB variable rates change 25 Aug, Westpac variable rates change 26 Aug. LVR requirements apply. CBA, Westpac and ANZ lowest rates are digital-only. Westpac and ANZ rates are refi only. Excludes green loans.
How many lenders have announced their post-RBA rates and are all passing the cut on in full?
Tracking shows 86 lenders on the database have announced their post RBA decision, however, less than half of these lenders have actually dropped their variable rates on the back of the 12 August cash rate cut, with the remainder to follow in the next 12 days.
The vast majority of lenders have said they’ll be passing this cut on in full to variable borrowers with two exceptions so far:
- Aussie Home Loans is only passing 0.10 percentage points on to its Aussie Select variable rate mortgages. Other Aussie mortgages will be getting the full 0.25 cut.
- Credit Union SA has said a very small number of investor loans may not get the full cut.
Rate relief now close to $300 a month for $600k mortgage
For a borrower with a $600,000 mortgage, this move would see their minimum monthly repayments drop by a further $89.
However, with two cuts already in effect, the total drop across the February, May and August cuts would be $272.
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| Impact of RBA rate cuts on minimum monthly repayments | ||
|---|---|---|
| Loan size at start of cuts | Cut in Aug | Across all 3 cuts (Feb, May, Aug) |
| $600,000 | -$89 | -$272 |
| $1m | -$148 | -$453 |
Source: Canstar. Notes: based on an owner-occupier paying principal and interest with 25 years remaining in Feb 2025 at the RBA av existing customer variable rate. Calcs assume banks pass on cuts in full the month after.
Interest rates fall, however, millions of repayments will not
CBA and ANZ will automatically adjust every one of their variable borrowers’ mortgage rates today, however, both of these banks, as well as NAB from Monday, will keep borrowers’ repayments the same, unless the customer asks them to lower it.
Westpac, however, will automatically adjust repayments for customers paying the minimum via direct debit, following the August RBA decision.
New data from CBA shows 14% of eligible borrowers have asked the bank to lower their repayments following the May cash rate cut. Figures from NAB and ANZ, both of which also don’t automatically drop customers’ repayments, are similar at 10% and 11% respectively.
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| Default repayment option following rate cut: big four | ||
|---|---|---|
| Lender | Automatically adjust repayments after rate cut? | % eligible borrowers who adjusted repayments after May cut |
| CBA | No – customer must initiate | 14% |
| Westpac | Yes – if paying minimum + have direct debit set up | N/A |
| NAB | No – customer must initiate | 10% |
| ANZ | No – customer must initiate | 11% |
Source: Canstar.com.au
Impact of keeping monthly repayments the same
If a borrower with a $600,000 mortgage and 25 years remaining at the start of the rate cuts kept their repayments the same after each of the three cash rate cuts (February, May and August), and kept paying this extra amount for the remainder of their loan, they could potentially save $76,536 in interest and pay their mortgage off 3 years and 3 months early.
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| Impact of keeping monthly repayments the same after 3 cuts | |||
|---|---|---|---|
| Loan size at start of cuts | Extra paid each month | Interest saved – life of loan | Time shaved off mortgage |
| $600k | $272 | $76,536 | 3 years, 3 months |
| $1m | $453 | $127,560 | 3 years, 3 months |
Source: Canstar.com.au. Calculations are indicative only, based on an owner-occupier paying principal and interest with 25 years remaining on a starting variable rate of 6.31% in Feb 2025. Assumes cuts in Feb, May and Aug and that banks pass on the cuts in full a month after the RBA change. Assumes the cash rate remains at 3.60% thereafter and that the borrower continues paying extra for life of loan.
Get ahead on your loan or enjoy the rate relief?
Canstar’s data insights director, Sally Tindall says, “CBA and ANZ variable-rate borrowers logging into their banking apps today will find August’s rate cut has now been applied. That’s an end of week change that’s sure to put more than a few smiles on faces nationwide.”
“For a typical borrower with a $600,000 mortgage, they’re looking at a total relief package of around $272 a month after what’s now been three cuts. That’s the equivalent of one trolley-full of groceries every single month.
‘’However, exactly where the relief lands is up to each individual as some banks won’t automatically lower customers’ repayments down to the minimum unless they’re asked.
“It’s great to see so many borrowers getting ahead on their loans, but it begs the question – how many customers are doing this out of complacency and how many don’t even realise that’s what’s happening?
“Leaving repayments unchanged after a rate cut is a great way to save thousands in interest, particularly for owner-occupiers. It’s a rare case where doing nothing might actually work in your favour, however, it’s worrying that some people might not be making an active choice.
“The key is to make it a conscious decision. If you need the cash, or if you want that extra money in your offset account, rather than directly in your mortgage, ask your bank to drop your repayments and redirect the funds to where you need them.
“CBA’s cuts to fixed rates today could be interpreted as a sign of what’s to come for the cash rate, however, when you put these rates side-by-side with their variable counterparts, it’s clear the bank is really just playing catch up.
“If you are looking to fix your mortgage, understand what might happen to the cash rate in the fixed rate term but most of all, spend time shopping around.
“Despite CBA’s fixed rate cuts this morning, there’s 0.65 percentage points difference between the bank’s lowest fixed rate and the lowest fixed in the market.”
This article was reviewed by our Content Editor Alasdair Duncan before it was updated, as part of our fact-checking process.
- How many lenders have announced their post-RBA rates and are all passing the cut on in full?
- Rate relief now close to $300 a month for $600k mortgage
- Interest rates fall, however, millions of repayments will not
- Impact of keeping monthly repayments the same
- Get ahead on your loan or enjoy the rate relief?
