At its August meeting, the Reserve Bank of Australia cut the cash rate by 25 basis points, bringing it down to 3.60 per cent. This is the third cut this year and the lowest level since April 2023. The decision is already flowing through to home loans and will have a direct impact on borrowers.
Want the full scoop from the RBA? You can check out their official media release here: RBA Monetary Policy Decision – August 2025.
What the rate cut means for borrowers
Lower repayments. A $500,000 loan could see monthly repayments fall by about $78 once the cut is applied. With three cuts in 2025, many homeowners are now saving a significant amount each month compared to the start of 2025.
Higher borrowing power. With interest rates moving lower, lenders can offer more borrowing capacity to buyers and investors. This creates opportunities for people who may have been priced out of the market earlier in the year.
Confidence in the property market. Realestate.com.au reports that property prices are now 4.9 per cent higher than they were a year ago. Lower interest rates are supporting buyer confidence, and the spring selling season is expected to be strong.
Who has passed on the cut?
Almost every lender has confirmed they will pass on the full 25 basis point reduction, although the timing varies.
- Bluestone was the first to pass on the cut, effective from 13 August 2025.
- The big four banks, including Commonwealth Bank, Westpac, NAB and ANZ, have confirmed the full cut with changes effective from 22 to 26 August.
- Many other lenders, including Athena, Macquarie, Bankwest, ING, Suncorp and St George, are also reducing rates.
- Some lenders will not apply the cut until early September 2025.
This means that some borrowers are already seeing savings while others may need to wait a few more weeks until their lender makes the change.
Why the RBA cut rates
The Reserve Bank has a dual mandate to keep inflation stable and maintain full employment. Inflation has now eased back into the target range of two to three per cent. Household spending has also softened. This combination has given the RBA room to lower interest rates to support growth. Another cut is expected later this year.
First home buyers
The lower cash rate is good news for first-home buyers, as it increases borrowing power and reduces repayments. In Queensland, there is an extra boost available through the $30,000 Queensland First Home Owner Grant, which is available until 30 June 2026.
This grant can be used alongside other schemes such as stamp duty concessions or the First Home Guarantee, making it even easier to take the first step into the property market. Combined with lower borrowing costs, it could help buyers purchase their first home sooner than expected.
The property market outlook
Market activity has already picked up in response to earlier cuts this year. According to realestate.com.au, home prices are rising again and are 4.9 per cent higher than a year ago. Experts expect further growth as the combination of cheaper finance and strong demand continues to push the market.
With more buyers able to borrow and the spring selling season approaching, competition in the housing market is expected to intensify.
What should borrowers do now?
Now is a great time to review your loan. While most lenders will pass on the cut, the bigger question is whether your loan is still competitive in today’s market.
Refinancing could deliver much larger savings than the recent cut alone, especially if your current rate has crept up over time. By comparing lenders, I can show you whether there is a better deal available that suits your situation.
Lower interest rates also increase borrowing power, which is helpful if you are planning to buy or invest. Combined with government incentives for first-home buyers, this may be the right time to explore your options. And if you know someone who is looking to purchase their first home, please feel free to pass on my contact details. I would love to help them.