The RBA just slashed interest rates to 0.1%. What will that mean for your mortgage?

The RBA has lowered official interest rates to 0.1%.

Listed rates are "standard variable rates" of selected lenders where available. 

After weeks of foreshadowing, the Reserve Bank of Australia made the extraordinary decision to cut interest rates at its latest policy meeting this afternoon. The official cash rate now sits at 0.1% — the lowest it’s ever been.

In his post-meeting statement, RBA Governor Philip Lowe said the move will help quicken the pace of economic recovery, and “the Board is prepared to do more if necessary.”

"With Australia facing a period of high unemployment, the Reserve Bank is committed to doing what it can to support the creation of jobs. Encouragingly, the recent economic data have been a bit better than expected and the near-term outlook is better than it was three months ago," he said.

The RBA also announced a number of changes to key policy rates aimed at keeping borrowing costs low. This includes trimming the Board’s three-year bond yield target and term funding facility rate from 0.25% to 0.1%.

The interest rate paid on exchange settlement accounts will also be cut from 0.1% to zero. This applies to commercial bank deposits held with the RBA. Typically, the Board keeps the exchange settlement rate a quarter of a percentage point below the cash rate, but since March it has been held at 0.1%.

By reducing it to zero, the Board hopes to encourage banks to lend out their cash, rather than keep it idle in the RBA’s strongbox.

The RBA will also purchase $100 billion of government bonds with maturities of around five to ten years, officially putting it on the quantitative easing path. These purchases will take place over the next six months, with the first auction to be held this Thursday.

"Under the program to purchase longer-dated bonds, the Bank will buy bonds issued by the Australian Government and by the states and territories, with an expected 80/20 split," said Lowe.

"The combination of the RBA's bond purchases and lower interest rates across the yield curve will assist the recovery by: lowering financing costs for borrowers; contributing to a lower exchange rate than otherwise; and supporting asset prices and balance sheets.”

More colour on the shape of economic recovery will be provided on Friday, when the RBA releases its quarterly statement on monetary policy.

How will banks respond?

Following the first rate cut of the year in March, 69 lenders in our database passed on the full cut to variable rate customers, while 12 passed on only part of the cut.

Right now, the average variable rate sits at 3.34% p.a. If lenders pass on today’s cut in full, the new average will be 3.19% p.a., which would equate to savings of $33 a month for an owner occupier making P&I repayments on a $400,000 loan.

While a few lenders have already moved to cut variable rates following the RBA’s announcement, there’s a good chance most cuts we’ll see will be applied to fixed rates, as was the case following this year’s second rate cut.

RELATED: Which banks have cut home loan rates in November?


On the other side of the coin, depositors will likely see the interest rates on their savings accounts fall even further. Just last month, we recorded 68 cuts to at-call deposits across the market, leaving the average ongoing savings rate at a paltry 0.55% p.a.

Mozo’s banking expert Peter Marshall explains that banks currently have very little motivation to attract new depositors, given the range of RBA programs aimed at making funding costs cheaper.

“Their main concern is having a sufficient level of liquidity. Banks can get that liquidity from wherever they want, and retail deposits are not rated very highly when it comes to assessing that liquidity ratio,” he said.

We’ll be keeping track of which banks have cut home loan rates as word comes in. If you feel refinancing is in order, be sure to visit our home loan comparison page, where you’ll be able to filter your search by rate and type.

 

Latest RBA rate cuts - variable rate lender announcements

Read last month's Reserve Bank interest rates update.

Last updated 13 May 2025 Important disclosures and comparison rate warning*
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Loan purpose
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  • Fixed Rate Home Loan

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    • Owner occupier
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    • 40% min deposit
    • Redraw available
    Interest rate
    5.69 % p.a.
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    Comparison rate
    5.70 % p.a.
    Initial monthly repayment
    $2,899
    Go to site
    • Offset and non-offset options for flexible payments
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  • Fixed Home Loan

    • Fixed rate
    • Owner occupier
    • Principal & Interest
    • 5% min deposit
    • Redraw available
    • Cashback
    Interest rate
    5.69 % p.a.
    Fixed 2 years
    Comparison rate
    6.00 % p.a.
    Initial monthly repayment
    $2,899
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    • Get up to $4,000 cashback (T&Cs apply)
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  • Unloan Variable Home Loan

    • Owner occupier
    • Principal & Interest
    • 20% min deposit
    • Redraw available
    Interest rate
    5.74 % p.a.
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    Comparison rate
    5.65 % p.a.
    Initial monthly repayment
    $2,915
    Go to site
    • Built by CommBank
    • The first home loan with an increasing discount (conditions apply)
    • No application or banking fees
  • OMG Home Loan

    • Owner occupier
    • Principal & Interest
    • 40% min deposit
    • Redraw available
    Interest rate
    5.74 % p.a.
    Variable
    Comparison rate
    5.77 % p.a.
    Initial monthly repayment
    $2,915
    Go to site
    • No ongoing annual fees
    • Pre-approval valid for 3 months
  • Basic Variable Home Loan

    • Owner occupier
    • Principal & Interest
    • 5% min deposit
    • Redraw available
    Interest rate
    5.74 % p.a.
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    Comparison rate
    5.79 % p.a.
    Initial monthly repayment
    $2,915
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    • No monthly or annual fees
    • Make extra repayments, access to redraw and pay out early without penalty
    • Choose weekly, fortnightly or monthly repayments
  • Fixed Home Loan

    • Fixed rate
    • Owner occupier
    • Principal & Interest
    • 10% min deposit
    • Offset available
    • Redraw available
    Interest rate
    5.74 % p.a.
    Fixed 2 years
    Comparison rate
    5.81 % p.a.
    Initial monthly repayment
    $2,915
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    • $0 application fee to pay
    • Additional repayments up to $20,000/year
    • Apply in as little as 15 minutes
  • Variable Home Loan

    • Owner occupier
    • Principal & Interest
    • 10% min deposit
    • Offset available
    • Redraw available
    Interest rate
    5.78 % p.a.
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    Comparison rate
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    Initial monthly repayment
    $2,927
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    • Owner occupier
    • Principal & Interest
    • 20% min deposit
    • Redraw available
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    Initial monthly repayment
    $2,931
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    Initial monthly repayment
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    • Fixed rate
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    • Offset available
    • Redraw available
    Interest rate
    5.79 % p.a.
    Fixed 2 years
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    Initial monthly repayment
    $2,931
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    $2,947
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  • Flex Home Loan

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    • Principal & Interest
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    • Offset available
    • Redraw available
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    5.84 % p.a.
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    6.08 % p.a.
    Initial monthly repayment
    $2,947
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    • Multiple offset accounts available
    • Free extra repayments
    • Easy redraw facility
  • Home Loan with Offset

    • Owner occupier
    • Principal & Interest
    • 40% min deposit
    • Offset available
    • Redraw available
    Interest rate
    5.88 % p.a.
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    $2,959
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    • No application and monthly account keeping fees
    • Get up to $4,000 cashback (T&Cs apply)
  • Basic Variable Home Loan

    • Owner occupier
    • Principal & Interest
    • 40% min deposit
    • Redraw available
    Interest rate
    5.88 % p.a.
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    5.91 % p.a.
    Initial monthly repayment
    $2,959
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    • No ongoing monthly loan maintenance fees
    • Weekly, fortnightly, or monthly repayment options
Showing 16 results from 414 home loans. Use the filters to see more

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* 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.

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