Knowledge Centre

Recent history suggests rate cut will drive refinancing surge

30/05/2025

Dozens of banks have responded to the Reserve Bank of Australia’s recent decision to reduce the cash rate from 4.10% to 3.85% by cutting interest rates for their variable-rate loans.

While the size and timing of the cuts varies from lender to lender, the trend is clear – most variable-rate borrowers are already seeing or will soon see their monthly repayments fall.

For a borrower with $500,000 outstanding on their home loan and 25 years remaining in their term, a rate cut of 0.25 percentage points means savings of about $75 per month or $900 per year. Please note these are rough estimates; actual savings will depend on your loan size, remaining term and interest rate.

What this new environment means for you

1. Even if you’ve received a rate cut, you may qualify for larger savings by refinancing to another bank, as some lenders are competing harder than others.
2. Your borrowing power could be higher now, which means you may be able to secure additional funds to purchase an investment property or renovate your home.
3. You’ll need to decide what to do with the increase in your disposable income. One option is to spend more; another is to invest the difference or use it to get ahead on your home loan.

The bottom line is that if you currently have a mortgage, you may be able to unlock meaningful savings by refinancing with a lender offering a lower rate – even if you had a competitive interest rate when you took out your loan.

Contact me to find out how much you might be able to save by switching home loans.