RBA Cash Rate Updates 2025

The Reserve Bank of Australia (RBA) left the cash rate on hold this month, which makes three rate cuts so far for 2025, and now - nothing. They last lifted rates in November 2023. Since May 2022, the cash rate increased from 0.10% to 4.35% until the three rate cuts we've had so far. As of now, the cash rate is paused on 3.60%.^

It seems that variable home loan interest rates may not moderate further this year, while fixed rates are already down significantly.

It’s understandable that homeowners are anxious about their home loan repayments. We've outlined everything you need to know about the latest RBA cash rate decision and what it means for your mortgage in the guide below.

Will interest rates fall again in 2025?

In their sixth rate announcement for 2025, the RBA has not indicated whether we're likely to see lower interest rates later this year, citing slightly stronger than expected local economic data:

"With signs that private demand is recovering, indications that inflation may be persistent in some areas and labour market conditions overall remaining stable, the Board decided that it was appropriate to maintain the cash rate at its current level at this meeting."^

Banks and other lenders are clearly taking these indications seriously.

Compare Club broker Sophie Matthews recommends that anyone facing the end of a low fixed interest rate term, consider refinancing their home loan. She also suggests you "act fast to maximise your savings."

If you've already moved off your low fixed interest rate, Sophie says that "there are strategies your household can employ to maximise any saving on your repayments, such as paying extra into your mortgage if you can afford it, or speaking to your lender about renegotiating your loan. "But the best thing any homeowner can do is speak to a mortgage broker or a finance professional. A few phone calls could save you thousands of dollars in home loan repayments." "The same goes for anybody looking to buy a new home right now. The housing market appears to be enjoying a real revival but you need to know your local market. Price growth is not the case for the whole of Australia, and you'll want to make your move before the market swings too much higher again."

What time is the RBA cash rate decision?

The RBA meet eight times this year, on the first Tuesday of each month (excepting January, April, July and October) to decide on monetary policy. The board announces the new cash rate at 2.30pm, with any changes they make coming into effect the next day, or as soon as lenders choose to pass them on.

Why do interest rates go up and down?

The RBA controls the national interest rate (also known as the cash rate) to ensure we have a stable currency and to avoid high inflation which generally drives up living costs.

The RBA examines the growth of the Australian economy and decides whether to slow it down by raising the cash rate or speed it up by lowering the cash rate.

Several factors influence the rise and fall of interest rates, including:

• Employment and wages growth - If employment levels are low, the RBA will be more inclined to lower the cash rate as a means of stimulating investment and creating more jobs. Similarly, slow wages growth can indicate slow economic growth and make it more likely that the RBA will keep the cash rate where it is.

• Inflation - One of the RBA’s ongoing goals is to keep the inflation rate between the 2 and 3 per cent target range. If the rate of actual inflation exceeds 3%, the RBA is inclined to increase interest rates to help consumers retain their level of buying power. The current quarterly rate of inflation is 2.1%. Though lower than last quarter, the RBA is still not convinced that inflation is stable enough to talk confidently about further rate cuts, other than the 0.25% reductions delivered in February, May, and August 2025.

• Growth of the Australian economy - GDP represents the value of all goods and services produced in Australia. If it falls too low, the RBA may lower the official cash rate target to help stimulate the economy (if interest rates are lower, more people will buy houses, open businesses, make investments, etc.)

How does the Reserve Bank of Australia’s cash rate announcement affect interest rates?

The official cash rate affects how expensive it is for banks and other financial institutions to borrow money from one another in the overnight money markets.

This exchange of short term ‘overnight funds’ is how lenders ensure they can meet their liquidity needs each day.

Simply, if it's more expensive for lenders to borrow money, they can pass this expense on to consumers by increasing the interest rates on their products (such as home loans).

How do interest rate changes affect me if I’m looking to buy property?

If the official cash rate rises, and lenders respond by lifting their mortgage rates, borrowing money costs you more. This affects the interest rate you are charged on the money you've borrowed as well. It also means you're likely to be approved for a lower borrowing capacity - impacting what type of place you can buy, and where.

A higher interest rate means that your variable rate mortgage will have higher monthly repayments and, consequently, will take longer for you to pay off.

Conversely, when the cash rate is lowered - and lenders pass this rate cut on to borrowers - your variable mortgage may have lower repayments and it's cheaper to borrow more money. You're more likely to be approved for a larger loan. This means you can bid or offer more for your dream home.

Compare Club's Head of Lending, Sophie, says the lower interest rates around offer an opportunity for first home buyers to finally get their chance to own their own place:

“It really is a market where it pays to take action now. For example, a homeowner with a $600k variable rate mortgage would have seen their repayment rise by an average of $1,250 per month since the rate rises began in May 2022. That's an extra $15,000 a year. So for every month a mortgage holder delays reviewing their mortgage, they're paying more in 'loyalty tax' to their lender.*"

How do interest rate changes affect me if I already have a mortgage?

If you’re already paying off a variable rate mortgage, then any change your lender makes to your loan’s interest rate affects the cost of your repayments.

So, if the RBA increases the official cash rate, you will likely pay more for your mortgage each month. When rates are cut, as they were recently, your repayments can reduce as well - if you have a variable rate home loan.

However, if you're still paying off a fixed rate portion of your mortgage, your repayments won’t be affected because you locked in your rate at settlement - though you'll want a plan for how you might handle the change to your repayments when your fixed rate period ends (see below).

What happens when your fixed rate ends?

Once your fixed rate period ends, you'll have to pay whatever variable rate your lender decides. This known as your 'revert rate', and it's usually higher than your bank's variable interest rate.

If you currently have a mortgage and you're worried about the impact of fluctuating interest rates on your repayments, it's worth thinking about refinancing to a lower rate now, so you're not caught out when your loan reverts to a variable rate.

Sophie says, “We've been working with homeowners to review their home loans and that message seems to be sinking in. We've seen record numbers of refinancing inquiries already over the past few months."

How much less will I pay if interest rates go down?

The answer really depends on:

1. The decision from the RBA.

2. How your lender adjusts your home loan interest rate in response.

Keep in mind, the RBA’s decision isn't the only factor lenders look at when adjusting home loan interest rates.

You can use Compare Club's refinancing calculator to work out how much you could save in monthly payments if you refinance.

How can I make sure I’m on the best home loan rate for me?

Even without a predicted rate adjustment on the horizon, it’s a good idea to periodically reassess your mortgage to see whether you can get a better rate.

Sophie highlights some good news: "There are some competitive fixed term loans available when you look beyond the big four banks, but there's no telling how long they'll remain on offer."

"There are some lower variable rate options too, so mortgage holders and purchasers have options when reviewing their loan through a broker. You may not have to put up with a higher rate just because your bank says so."

It’s also a good idea to negotiate with your current lender to see what rate they're willing to offer to keep you.

Be careful not to agree to the first offer they make, as while it might be lower, it may not be the best deal you can get.

A quick and easy way to see if you can get a better offer, is to use a service like Compare Club which compares lenders to find you a better option.

By comparing home loans, you can get ahead of the recent rate movements and potentially switch to a better deal.

Get started with Compare Club today and see if you can get a better deal on your home loan.

Sources

^RBA statement September 2025. *Numbers are based on an average mortgage of $600,000 according to the Lending indicators from the Australian Bureau of Statistics with principal and interest repayments over a 25 year loan term, the average interest rate on Compare Club's panel of over 50 lenders, and the cumulative RBA cash rate decisions announced since May 2022 to date.

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Anthony Stevenson, is the head of home loans at Compare Club. With over a decade of experience under his belt, Anthony is dedicated to helping individuals make informed decisions when choosing a home loan. Whether it's finding a great deal on your home loan or refinancing, Anthony has a wealth of knowledge in the space.

Meet our home loans expert,  Anthony Stevenson

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  Refinancing is the smartest, fastest way to lower your repayments and give yourself some breathing room.

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  Home loan pre-approval is not compulsory. It’s possible to begin your home loan application after you’ve found the home you want to buy.