2025 RBA interest rate tracker: What do rate cuts mean for your home loan?
- RBA cut the cash rate by 25 basis points to 3.60%, its lowest level in two years
- Several banks announced savings rate cuts – find out if your account is affected
- Markets and analysts expect next cut by November, with rates near 3% in 2026
- The central bank downgraded growth forecasts as productivity remains weak
Changes to the official cash rate influence all types of interest rates – from home loans and savings accounts to personal loans and term deposits. At Mozo, we track these shifts closely to help you understand how they affect your money.
RBA cuts cash rate to 3.60% in August
In a widely anticipated move, the Reserve Bank of Australia (RBA) lowered its official cash rate by 25 basis points to 3.60% in August, marking its third cut of the year. This came only a month after a surprise hold on the cash rate in July, which had left markets on alert for renewed easing.
The decision reflected the RBA’s cautious yet proactive stance – headline inflation had slowed to 2.1%, and core inflation sat at 2.7% – both now within or near the target band of 2-3%. Combined with rising unemployment, the economic outlook signalled enough slack to justify additional monetary accommodation.
While many borrowers welcomed the cut – anticipating significant reductions in mortgage repayments – analysts and the RBA warn that the pace of future easing will likely remain gradual as the central bank balances inflation risks against economic fragility.
The table below shows when lenders adjust home loan rates in response to the RBA decision.
| Home Lender | Rate change | Effective date | Expected variable rates from (p.a.) | RBA Match |
|---|---|---|---|---|
| -0.25% | 22 Aug 2025 | 5.64% |
|
|
| -0.25% | 22 Aug 2025 | 5.34% |
|
|
| -0.25% | 25 Aug 2025 | 5.69% |
|
|
| -0.25% | 26 Aug 2025 | 5.34% |
|
|
| -0.25% | 25 Aug 2025 | 5.49% |
|
|
| -0.25% | 22 Aug 2025 | 5.5% |
|
|
| -0.25% | 12 Aug 2025 | 5.49% |
|
|
| -0.25% | 21 Aug 2025 | 5.3% |
|
|
| -0.25% | 26 Aug 2025 | 5.54% |
|
|
| -0.25% | 29 Aug 2025 | 5.38% |
|
|
| -0.25% | 26 Aug 2025 | 5.54% |
|
|
| -0.25% | 23 Aug 2025 | 5.44% |
|
|
| -0.25% | 2 Sep 2025 | 5.29% |
|
|
| -0.25% | 27 Aug 2025 | 5.39% |
|
|
| -0.25% | 26 Aug 2025 | 5.34% |
|
|
| -0.25% | 26 Aug 2025 | 5.34% |
|
|
| -0.25% | 26 Aug 2025 | 5.24% |
|
|
| -0.25% | 25 Aug 2025 | 5.24% |
|
|
| -0.25% | 26 Aug 2025 | 5.29% |
|
|
| -0.25% | 26 Aug 2025 | 5.39% |
|
|
| -0.25% | 26 Aug 2025 | 5.29% |
|
|
| -0.25% | 15 Aug 2025 | 5.39% |
|
|
| -0.25% | 26 Aug 2025 | 5.24% |
|
|
| -0.25% | 2 Sep 2025 | 5.29% |
|
|
| -0.25% | 26 Aug 2025 | 5.14% |
|
|
| -0.25% | 26 Aug 2025 | 5.54% |
|
|
| -0.25% | 22 Aug 2025 | 5.39% |
|
|
| -0.25% | 27 Aug 2025 | 5.29% |
|
|
| -0.25% | 21 Aug 2025 | 5.39% |
|
|
| -0.25% | 12 Aug 2025 | 5.24% |
|
Home loan rate change calculator
Use our handy calculator to see how your mortgage repayments could change with a rate cut.
Loan details
Repayment change if rates change
Reserve Bank of Australia cash rate
Interest rates are the main tool central banks have at their disposal for steering the economy in a desired direction. Central banks around the world have been lifting interest rates in response to high inflation, and the RBA is no exception.
Over two years from 2022-23, the RBA lifted the cash rate by 425 basis points. It held steady at 4.35% through 2024 and now into 2025, and with inflation more under control, the RBA cut the rate in February to 4.10% and again in May, to 3.85%.
When is the next RBA interest rate decision?
RBA rate announcement dates for 2025 can be found on our RBA monetary policy page.
The RBA publishes its cash rate decision at 2:30pm on the second day of deliberations. This includes a statement from RBA governor Michele Bullock. You can read about the announcement and any bank movements by visiting our Reserve Bank interest rates article.
Variable rate home loans
Variable rate home loans are sensitive to RBA interest rate movements. They will usually be priced a few percentage points higher than the RBA’s target because lenders factor in operating costs. If the cash rate goes up, variable rates will too.
The graph below shows the relationship between the cash rate and variable rates for various home loan borrower types.
Lowest and average variable rates
4.99% p.a.
Lowest variable interest rate in the Mozo database - August 2025.
6.15% p.a.
Average variable home loan rate for owner occupiers in the Mozo database - August 2025.
Fixed rate home loans
Fixed rate home loans are predictive of RBA interest rate movements. Since fixed rates stay the same for their fixed term, lenders set rates based on what they think the RBA will do during that period. If they expect interest rates to rise, so will fixed rates, and vice versa.
The graph below shows the average fixed rates for 1-5 year home loan terms. You can see how they have followed a similar path to the RBA cash rate.
Average fixed rates
5.62% p.a.
Average fixed 1 year home loan rate for owner occupiers in the Mozo database - August 2025.
5.42% p.a.
Average fixed 3 year home loan rate for owner occupiers in the Mozo database - August 2025.
5.78% p.a.
Average fixed 5 year home loan rate for owner occupiers in the Mozo database - August 2025.
Average new loan repayments across Australia
Frequently Asked Questions
What is the RBA cash rate?
The cash rate (also called official interest rates or the policy rate), is the interest rate on 'overnight funds.' These are the funds that banks lend to one another to cover the transactions they have to make on a daily basis.
When the Reserve Bank of Australia moves the cash rate up or down, it tends to shift the economic mood in ways that are believed to affect spending, investment, inflation and employment.
How does the cash rate affect home loan rates?
The cash rate directly affects variable home loan rates, so unless you’ve fixed your mortgage, you can expect your interest rate to increase by roughly the same amount. But the cash rate is one of several things banks have to take into account when pricing their loans. While it serves as a baseline, rates will differ across lenders depending on their business needs (think the cost of staff, branches, marketing, and interest paid out to customers).
When does the RBA announce its decision?
Traditionally the RBA has met on the first Tuesday of every month (except January). It announces any changes to the cash rate at 2:30 the same day. From 2024 however, the RBA began to only meet 8 times a year instead of 11. The Tuesday announcement time remains the same.
How does the cash rate affect the economy?
Households and companies borrow money to spend, so if the cost of borrowing is high, we can expect them to dial down their spending. This impacts business profits, hiring and investment decisions, employment, wages and ultimately inflation.
Will higher interest rates cause property prices to fall?
Higher interest rates have a dampening effect on property prices. This is because the higher cost of borrowing tends to discourage hopeful buyers, particularly first home buyers, from entering the market.
What's are the RBA inflation and employment targets?
The RBA has an inflation target of between 2% and 3%. The RBA typically also places a high priority on achieving full employment, which is when the jobless rate is around 4%.
* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.
** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.
^See information about the Mozo Experts Choice Home Loan Awards
Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.
While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.