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Rate cuts kick in, but does your bank automatically adjust your repayments?
Millions of borrowers with a variable home loan will see their interest rate drop today, as the banks’ rate cut kicks in.
28 Feb 2025
Millions of borrowers with a variable home loan will see their interest rate drop today, as the banks’ rate cut kicks in.
Millions of borrowers with a CBA, NAB or ANZ variable home loan will see their interest rate drop today, as the banks’ 0.25 percentage point rate cut, announced on the back of the RBA cash rate decision, kicks in.
This means from today, when each bank goes to calculate a borrower’s interest charges, which it does daily, it will do it from the lower rate. Westpac variable home loan customers will have to wait until Tuesday (4 March) for their rate cut to take effect.
Challenger bank, Macquarie, also cut variable rates today, alongside CBA subsidiary BankWest, ANZ’s Suncorp and the Teachers Mutual group, among others.
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| Big four + Macquarie – new variable rates | ||
|---|---|---|
| Lowest variable | Lowest variable with offset |
|
| CBA | 5.90% | 6.09% |
| Westpac | 6.19% | 7.19% |
| NAB | 6.19% | 6.54% |
| ANZ | 5.84% | 5.84% |
| Macquarie | 5.89% | 5.89% |
Source: Canstar.com.au. * Westpac rates change Tuesday 4 March. CBA and ANZ lowest rates are for their digital-only home loans. Additional fees apply for offset. Rates are for owner-occupiers, LVR requirements apply.
Tracking by Canstar shows 24 lenders have already dropped variable rates on the back of last Tuesday’s cash rate cut, while just under 50 lenders have announced their decision, with the new rates still to come into effect.
Cuts kick in, but borrowers may not see monthly repayments drop for weeks.
For the majority of borrowers, the rate cut comes into effect today, however, many banks will keep borrowers’ repayments the same as they were before the cut, unless the customer asks them to lower it.
Does your bank adjust repayments after a rate cut?
- CBA: no—customer must initiate change in direct debit
- Westpac: yes—if paying the minimum + have a direct debit set up
- NAB: no—customer must initiate change in direct debit
- ANZ: no—customer may have to initiate change in direct debit
- Macquarie: yes—if paying the minimum + have a direct debit set up.
Even then, a drop in a customer’s home loan payments will not be immediate. Westpac and Macquarie both automatically adjust a person’s direct debit if they are paying the minimum, however, their customers will not see a drop in their monthly repayments until at least the end of March, with most of these borrowers likely to see the reduction in April, depending on their billing cycle.
How much relief will the rate cut bring?
Canstar.com.au analysis shows for someone with a $600,000 debt, and 25 years remaining, their minimum monthly repayments will drop by an estimated $92 as a result of the RBA’s February cash rate cut.
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| Impact of RBA’s February rate cut | ||
|---|---|---|
| Loan size today |
New min monthly repayments |
Change |
| $600,000 | $3,892 | -$92 |
| $750,000 | $4,865 | -$115 |
| $1,000,000 | $6,486 | -$154 |
Source: Canstar.com.au. Note: calculations are estimates based on an owner-occupier paying principal and interest with 25 years remaining on the average variable rate of 6.32%. Does not factor in any additional repayments.
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| Current lowest rates on Canstar | |
|---|---|
| Lender | Variable rates from |
| Pacific Mortgage Group | 5.59% |
| Police Bank | 5.59% |
| Qudos Bank | 5.69% |
| Regional Australia Bank | 5.69% |
| G&C Mutual Bank | 5.70% |
| Bank First | 5.74% |
| Firefighters Mutual Bank | 5.74% |
| Health Professionals Bank | 5.74% |
| Homestar Finance | 5.74% |
| Reduce Home Loans | 5.74% |
| Summerland Bank | 5.74% |
| Teachers Mutual Bank | 5.74% |
| Uni Bank | 5.74% |
| Unloan | 5.74% |
Source: Canstar.com.au. Rates as at 28.02.25 – 10:30am AEDT. Excludes introductory rates and green loans. Rates are for owner-occupiers paying principal and interest, LVR and loan size requirements may apply.
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Owner occupied
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Owner occupied
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Owner occupied
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Owner occupied
40% min deposit
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This article was reviewed by our Finance Editor Jessica Pridmore before it was updated, as part of our fact-checking process.
Owner occupied
40% min deposit
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