We’ve been experienced mortgage brokers at Sri Finance, and we’ve seen how
fluctuations in interest rates can have a big effect on Australians. On May 20,
2025, the Reserve Bank of Australia (RBA) lowered the cash rate by 0.25
percentage points to 3.85%. This was good news for many people, especially
those with variable rate mortgages. Let’s look at what this entails for those who
borrow money and the economy.
What This Means for You.
This cut could lower your monthly payments if you have a mortgage with a
variable rate. If you get a loan for $500,000, a 0.25% rate cut may save you
around $83 a month, or about $1,000 a year. It’s a chance to relieve some of the
stress of money, especially since living expenditures are so high. Now can be an
excellent time to refinance because banks are competing with lower rates.
What Banks Are Doing.
All four of the Big Four banks—Commonwealth Bank, NAB, Westpac, and ANZ—
have said they will pass on the whole 0.25% cut. NAB was the first to do this,
starting on May 30, 2025, and letting consumers choice to lower their payments
or pay off their debts sooner. Others followed, making sure that many mortgage
holders would benefit.
Making the Economy Better.
Lower interest rates can make people more likely to borrow and spend money,
which helps the economy thrive. The RBA wants to manage inflation between
2% and 3%. This cut helps balance supply and demand after a time of high
rates. It’s especially important given the uncertainties in the world, including
trade conflicts.
Who Gets the Most Out of It?
Banks with a lot of variable rate mortgage customers, like the Big Four, would
see an immediate rise in consumer satisfaction and possibly additional loan
applications. People who are quick to change rates, like NAB, may get more
customers. But how quickly banks change the cost of funding will affect how
profitable they are, which might cut into their profits.
We at Sri Finance can help you deal with these changes and locate the finest
mortgage options. We can help you with either refinancing or changing your
payments.
