More than 50 lenders ready to pass on full 0.25% rate cut

Homeowners across Australia have reason to smile as over 50 lenders – including the big four banks – are set to fully pass on the Reserve Bank’s recent 0.25-percentage-point cut. This is the first such move since 2020, lowering the cash rate from 4.35% to 4.10% and offering a glimmer of relief amid ongoing mortgage pressures.

What’s Changing?

In the coming weeks, lenders are gearing up to adjust their variable home loan rates. Notably, the lowest advertised rate will drop to 5.64%, a figure offered by Australian Mutual Bank, Homestar Finance, and RACQ. Among the major banks, ANZ is leading with a competitive rate of 5.84%, closely followed by CBA at 5.90%, while NAB and Westpac will set theirs at 6.19%.

• Effective Dates:
  • CBA, NAB, and ANZ – 28 February
  • Westpac – 4 March

Data also suggests that over 35 lenders will offer at least one variable rate below 5.75%, and more than 60 lenders will have a rate under 6%. The new estimated average variable rate for owner-occupiers is expected to settle at 6.07%.

A Welcome Relief

Canstar’s data insights director, Sally Tindall, described the response as “incredible”. “Borrowers across the country will hopefully be able to sleep slightly easier tonight, knowing that mortgage relief is finally here,” Tindall remarked. She noted that even though a 0.25-percentage-point drop may seem modest compared to the string of rate hikes over recent years, it brings much-needed relief.

For instance, Moneywise calculations indicate that a 0.25% reduction could shave about $92 off the monthly repayments for an owner-occupier with a $600,000 loan over 25 years. Even more impressively, if borrowers maintain their current repayment levels, they could save nearly $90,000 in interest and trim the loan term by up to four years. “If you can grit your teeth and tip any savings into your home loan, you’ll thank yourself down the track,” Tindall advised.

Looking Ahead

The big four banks’ commitment to passing on the cut has put pressure on smaller lenders to follow suit. While RBA Governor Michele Bullock has urged caution—warning borrowers not to bank on multiple rate cuts—there is optimism that up to four further cuts could occur in 2025. Tindall also suggested that refinancing might be a smart move for those who haven’t shopped around recently, as switching to a lender with one of the lowest rates could unlock additional savings, despite the associated paperwork and fees.

This initial cut not only puts dollars back into household budgets but also hints that the worst of the cost-of-living squeeze may finally be easing. For many Australians, this development is more than just a rate adjustment—it’s a step towards a more manageable financial future.