The RBA has cut the cash rate for the second time this year - what could this mean for your mortgage?
The board of the Reserve Bank has announced a 25 basis point drop to the cash rate, potentially meaning rate cuts from banks and lenders soon.

The board of the Reserve Bank has announced a 25 basis point drop to the cash rate, potentially meaning rate cuts from banks and lenders soon.
The Reserve Bank of Australia has cut the cash rate by 25 basis points to 3.85% at its May meeting, in a move that will surely provide some measure of relief to struggling variable rate home loan borrowers.
The bank’s board, which now meets eight times a year, has already cut rates by 25 basis points this year, with economists at major banks predicting that we will see further cuts before 2025 is out.
“This is the news borrowers have been holding out for since the last cash rate cut in February,” Canstar data insights director Sally Tindall said of today’s cash rate cut.
“While one cut is unlikely to be a silver bullet for many households, it’s a small weight off the shoulders of millions of borrowers across the country.”
Will banks and lenders cut their interest rates?
“The banks know better than most just how hard it has been for so many of their customers labouring under the strain of higher rates,” says Tindall. “Over the next few days, we expect the majority of lenders are passing on this cash rate cut, but if you find yours doesn’t, speak up – to your bank, to your friends, even on social media or on your local radio station. Lenders who opt not to provide this relief to their customers need to be held accountable.”
Tindall also reminds home loan borrowers that it’s important to contact your lender after a rate cut, as some won’t automatically adjust your direct debits, even if you’re paying the minimum. “In the case of CBA, NAB and ANZ, you’ll have to make contact with your bank to ask them to do this before you see this relief land in your bank account,” she says.
How much could you save after a 25 basis point cut?
Canstar crunched the numbers to find out how much the average home loan borrower could save if banks and lenders cut rates in line with today’s RBA cash rate announcement.
← Mobile/tablet users, scroll sideways to view full table →
Impact of a 0.25%pt RBA cash rate cut in May | |||
Loan size | Current monthly repayment | New monthly repayment | Drop in monthly repayment |
$500,000 | $3,240 | $3,164 | -$76 |
$600,000 | $3,888 | $3,797 | -$91 |
$750,000 | $4,860 | $4,746 | -$114 |
$1,000,000 | $6,480 | $6,328 | -$152 |
The comparison rate for all home loans and loans secured against real property are based on secured credit of $150,000 and a term of 25 years.
^WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
Up to $4,000 when you take out a IMB home loan. Minimum loan amounts and LVR restrictions apply. Offer available until further notice. See provider website for full details. Exclusions, terms and conditions apply.
Canstar may earn a fee for referrals from its website tables, and from Sponsorship or Promotion of certain products. Fees payable by product providers for referrals and Sponsorship or Promotion may vary between providers, website position, and revenue model. Sponsorship or Promotion fees may be higher than referral fees. Sponsored or Promoted products are clearly disclosed as such on website pages. They may appear in a number of areas of the website such as in comparison tables, on hub pages and in articles. Sponsored or Promoted products may be displayed in a fixed position in a table, regardless of the product’s rating, price or other attributes. The table position of a Sponsored or Promoted product does not indicate any ranking or rating by Canstar. For more information please see How We Get Paid.
How can you save on your home loan repayments?
Since the RBA’s February cash rate cut, there has been a noticeable uptick in the number of Aussies refinancing their home loans. In fact, almost 100,000 loans were refinances in the first three months of 2025, with the number of refinances at the highest level in more than 18 months. If you’re currently nearing the end of your fixed rate or looking for cheaper variable rate than your current lender is offering, you can compare home loans with Canstar to see if you can find a lender offering a deal that meets your needs and circumstances.
If you’re considering refinancing from a variable rate to a fixed one, it may also be worth considering the pros and cons of fixing your home loan, and considering the current interest rates on home loans to see how fixed and variable rate loans stack up. You might also want to consider some of the home loan refinancing deals that might be available.
Get alerted as soon as providers change their rates on our database
Create a watch list on the Canstar App to track providers’ home loan or savings rate changes
Image source: Yuganov Konstantin/Shutterstock.com
This article was reviewed by our Editor-in-Chief Nina Rinella before it was updated, as part of our fact-checking process.

Alasdair Duncan is Canstar's Content Editor, specialising in home loans, property and lifestyle topics. He has written more than 500 articles for Canstar and his work is widely referenced by other publishers and media outlets, including Yahoo Finance, The New Daily, The Motley Fool and Sky News. He has featured as a guest author for property website homely.com.au.
In his more than 15 years working in the media, Alasdair has written for a broad range of publications. Before joining Canstar, he was a News Editor at Pedestrian.TV, part of Australia’s leading youth media group. His work has also appeared on ABC News, Junkee, Rolling Stone, Kotaku, the Sydney Star Observer and The Brag. He has a Bachelor of Laws (Honours) and a Bachelor of Arts with a major in Journalism from the University of Queensland.
When he is not writing about finance for Canstar, Alasdair can probably be found at the beach with his two dogs or listening to podcasts about pop music. You can follow Alasdair on LinkedIn.