RBA Cuts Interest Rates Again – Here’s What It Means for You
- Aron Cardona
- Aug 12, 2025
- 4 min read
The Reserve Bank of Australia (RBA) has just delivered some welcome news for homeowners, buyers, and anyone thinking about refinancing — the official cash rate has been cut by 0.25%, bringing it down to 3.60%.
This marks the third cut in the current easing cycle, which began back in February this year. It’s also the lowest the cash rate has been since May 2023.
So, what’s behind the decision? How does it affect your mortgage or your ability to buy? And most importantly, what should you do next?
Let’s break it down in plain English.
Why the RBA Cut the Rate
Interest rates are one of the main tools the RBA uses to manage Australia’s economy. When inflation is high, the RBA tends to raise rates to slow spending. When inflation falls, rates can come down to give households and businesses more breathing room.
This time, the RBA pointed to a few key reasons for the cut:
Inflation is easing – Inflation has been gradually coming back down towards the RBA’s target range of 2–3%. The latest figures show trimmed mean inflation at 2.7% over the year and headline inflation at 2.1%.
The job market is cooling slightly – Unemployment ticked up to 4.3% in June, which is still low by historical standards, but it signals that the labour market is loosening.
Economic growth is subdued – Australia’s economy has been sluggish, with households and businesses feeling the pinch. A lower rate is designed to encourage spending and investment.
RBA Governor Michele Bullock summed it up simply: with inflation coming down and growth soft, the time was right to offer some relief.
How the Vote Went
This wasn’t a split decision, all nine members of the RBA board voted in favour of the cut. That’s a clear sign that the central bank felt confident it was the right move.
The Bigger Picture
This 0.25% drop brings the total rate cuts this year to 0.75% (75 basis points). For borrowers, that can translate into thousands of dollars saved over the life of a loan — assuming your lender passes it on in full.
And there’s a decent chance this won’t be the last cut we see in 2025.
Peter White from the Finance Brokers Association of Australia noted that there’s “certainly room” for one or two more cuts this year if inflation and economic growth keep tracking the way they are now. Others in the finance industry agree that the conditions are right for more interest rate relief.
What This Means for Homeowners
If you’ve got a mortgage, a lower cash rate could mean:
Lower repayments – If your lender passes on the full 0.25% cut, your monthly repayments could drop.
More breathing room – Less money going to interest means more in your pocket for savings, investments, or everyday expenses.
A chance to get ahead – You could keep your repayments the same as before and pay off your loan faster, saving thousands in interest over time.
But here’s the catch — not all lenders pass on the cut immediately. Some might delay. Some might pass on only part of it. And a few may hold off completely to protect their profit margins.
What This Means for Buyers
If you’re in the market for a new home or investment property, this could be good news for you too.
Lower rates can:
Boost borrowing power – According to Loan Market CEO David McQueen, a buyer earning $120,000 a year could now borrow around $42,000 more compared to the start of the year.
Improve affordability – Lower rates mean lower monthly repayments on the same loan amount, making property ownership more achievable.
Increase competition – More buyers may enter the market, especially as we head into the busy spring selling season.
But remember: a rate cut isn’t a magic bullet. Property prices can rise when demand increases, so it’s important to have a clear budget and stick to it.
The Market’s Reaction
The financial world largely saw this coming. After leaving the rate unchanged in July, the RBA was waiting for fresh data — particularly the June quarter inflation numbers — before making its move.
Industry leaders welcomed the decision:
Peter White (FBAA) said the cut will help more borrowers, especially with APRA’s buffer rate still in place.
Mark Haron (Connective) called it “well timed” and said it gives both financial and psychological relief.
Simon Bednar (Finsure) noted that the economic conditions were perfect for rate relief and hinted at the possibility of more cuts soon.
Anthony Waldron (Mortgage Choice) believes the cut will boost borrowing activity ahead of spring.
Barry Saoud (Pepper Money) said lower rates are expected to re-energise the housing market and lift buyer sentiment.
What You Should Do Next
If you already have a mortgage:
Check if your lender is passing on the cut – They’re not obliged to do it straight away (or at all).
Consider refinancing – With multiple cuts this year, now could be a great time to shop around for a better deal.
Think strategically – If you can afford it, keep repayments the same to pay down your loan faster.
If you’re looking to buy:
Get pre-approved – This will help you know your new borrowing power and shop with confidence.
Move quickly – Lower rates can mean more competition in the market.
Get expert advice – A mortgage broker (like us!) can help you navigate changing lender policies and secure the best option.
Final Thoughts
The RBA’s latest 0.25% rate cut is a welcome step for borrowers, but it’s not the end of the story. Rates may come down further, but uncertainty — both here and overseas — means nothing is guaranteed.
The key takeaway? Don’t just sit and wait for your lender to call you. They probably won’t. Instead, take this as your cue to review your loan, understand your options, and make sure you’re in the best possible position.
Whether you’re refinancing, buying your first home, or investing, a lower cash rate can open up opportunities — but only if you act on them.
Need help making the most of the rate cut? Let’s review your loan and see what the new cash rate means for you. I’ll compare options from over 40 lenders and help you choose the one that works best for your goals.