The RBA has cut the cash rate for the second time this year - what could this mean for your mortgage?

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.

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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.

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