When life’s busy, it’s easy to miss a headline, especially one about the Reserve Bank of Australia (RBA). But if you’ve got a mortgage or you’re thinking about borrowing soon, this one matters. The RBA just cut the cash rate by 0.25%, bringing it down to 3.85%. And while that might sound like another dry economic update, it could have a very real impact on your finances.
So, if you didn’t catch the announcement, don’t worry. We’ll catch you up quickly. More importantly, we’ll show you exactly why now is the time to check your mortgage, talk to your broker, and take action before the banks move (or don’t) because sitting tight might be the most expensive choice you make this year.
Quick Recap: What Changed and Why It Matters
The recent RBA interest rate cut has brought the official cash rate down to 3.85%, from a previous 4.10%. It’s the first rate movement in several months, and it comes off the back of slower-than-expected inflation figures and softening consumer demand. For the RBA, this move signals a shift towards easing financial pressure.
But here’s the catch: while the RBA has moved, your bank might not. And even if it does, that change may not automatically flow through to your home loan unless you’re proactive.
Why this isn’t just another headline
Let’s be real. RBA decisions often feel removed from your daily life. But this one is different. Even a small shift in interest rates can affect your:
- Monthly repayments
- Total loan interest over time
- Borrowing power for future plans
- Leverage for refinancing or negotiating a better deal
In other words, this rate cut could help you save money. But only if you act on it.
Why Ignoring Your Mortgage Is Costing You
Are you aware of your current mortgage rate? If you had to pause and think, you’re not alone. According to MoneySmart.gov.au, many Australians don’t know their rate, let alone how it compares to what’s available.
And that’s a problem because doing nothing could be quietly costing you thousands.
Small changes compound quickly
Let’s say you have a $600,000 loan over 30 years. A 0.25% reduction in interest could reduce your repayments by around $90 per month. That’s over $1,000 a year, and more than $30,000 over the life of your loan.
If your lender hasn’t passed on the rate cut, or you’re still on a high variable home loan rate, you’re potentially missing out.
Why most borrowers stay stuck
Many homeowners:
- Assume their rate is competitive because they negotiated it a few years ago
- Don’t realise lenders often reserve the sharpest rates for new customers
- Feel overwhelmed by refinancing options in Australia, and avoid making a move
- Aren’t aware they can negotiate without switching banks
But staying passive could be costing you. That’s why it pays to stay informed and ask better questions.
What The Banks Haven’t Told You Yet
The RBA made its move. But the banks? They’re still deciding. Some have passed on the full cut to customers. Others are “reviewing their position”. This delay isn’t random. It’s strategic.
Lenders move at different speeds
Banks aren’t required to pass on RBA rate cuts. And when they do, it often happens:
- On a delay of several weeks
- Only partially (e.g. a 0.15% cut instead of 0.25%)
- Selectively (e.g. only for certain loan products or new borrowers)
This lag gives lenders time to manage profit margins and test how aware or reactive their customer base really is. Put simply, if you don’t ask questions, you may be left behind.
What delayed responses mean for you
Let’s say your lender is still “considering” whether to pass on the cut. If you don’t take action:
- You could be stuck paying a higher rate for months
- Your equity position might improve slower
- You might miss the perfect timing to restructure or refinance your home loan
Being one of the last to benefit could mean you’re subsidising someone else’s better deal.
This is where brokers make a difference
An experienced Sydney mortgage broker can:
- Tell you quickly whether your lender has moved (and by how much)
- Compare your rate to the market instantly
- Negotiate with your current bank or recommend better options
- Handle paperwork and switching if needed
- Help you time your move so you’re not left reacting too late
And in most cases, broker services don’t cost you a cent. That’s real value.
A Subtle Bump In Your Borrowing Power
Even if you’re not planning to buy right now, this rate cut could shift what’s possible.
When the cash rate drops, lenders often adjust their assessment rates. This is the higher benchmark used to test your borrowing capacity. That means:
- Your ability to borrow could improve by 2–3%
- You might qualify for a larger loan (even if your income hasn’t changed)
- You could now afford a property or suburb that was previously out of reach
- You may become eligible for better loan features, like offset accounts or cashback deals, which were previously outside your borrowing range
What does this mean in practical terms?
Let’s say your borrowing power was capped at $700,000. A small adjustment could push that closer to $720,000–$730,000. That could be the difference between:
- Buying sooner vs. waiting another year
- Staying in your ideal location vs. compromising
- Retaining more of your deposit for fees, renovations, or savings
- Strengthening your position at auction where every dollar counts
If you’ve been holding off because you didn’t quite qualify, now’s the time to reassess.
3 Quick Steps To Get Ahead
You don’t need to become an interest rate expert overnight. But taking these simple steps could put you thousands of dollars ahead and give you a stronger financial position moving forward.
1. Check your current rate
Look up your rate and compare home loan rates across other lenders to see where you stand. (hint: many start around the low 6% range right now, depending on the loan type and LVR). If your rate is significantly higher, you’ve got a conversation to have.
Better yet, don’t rely solely on comparison websites. They often show headline rates that don’t reflect what’s actually achievable based on your credit score, equity, or income. This is where personalised advice makes a difference.
2. Ask the right questions
- Has my lender passed on the RBA rate cut?
- Is my loan still competitive compared to what’s on offer today?
- Could I access a better deal as an existing customer, or is it time to switch?
- What impact would a lower rate have on my repayments or loan term?
- Am I eligible for any cashbacks or refinance incentives?
- Could restructuring my loan help me meet other financial goals?
Your mortgage broker can help you decode the answers and build a plan that aligns with your broader financial picture, not just your loan.
3. Be ready before the banks adjust
The window to act is often short. Once lenders recalibrate, the sharpest deals get snapped up quickly. Having updated documents and clarity on your goals means you can move fast, whether it’s refinancing, negotiating, or buying.
Being “application ready” could mean the difference between locking in a great deal now or waiting weeks while others jump the queue. Start gathering your income statements, expenses, and loan details now.
Don’t Let This Moment Slip By
You don’t need to know every RBA announcement by heart. But missing this one completely? That could mean missed savings, lost leverage, and a delayed financial goal.
Even a small rate shift can unlock real value. But only if you act early, ask the right questions, and review your options before the market moves again.
Want help checking where you stand? A quick chat with a trusted mortgage broker at Unconditional Finance can give you clarity in minutes. Whether you’re staying put, looking to refinance, or planning your next move, now’s the time to make sure your home loan is working for you, not against you.
Reach out today for a tailored mortgage check-up and expert support that keeps you ahead of the curve.
Frequently Asked Questions (FAQs)
That’s a common frustration. The RBA cash rate is just a benchmark, and banks aren’t required to follow suit. Some lenders may delay passing on cuts or reduce rates only for new borrowers. Others might apply a smaller reduction than the RBA announced. This lag helps protect their profit margins. If your rate hasn’t moved, it doesn’t mean you’re stuck. A broker can help you compare options, ask the right questions, and potentially negotiate a sharper deal, even with your current lender.
Not immediately. Fixed rates are locked in for the duration of your fixed term, so your repayments won’t change until that period ends. But this RBA cut could still matter to you. It might shift the variable rates you’ll be offered when your fixed term expires, and it could open up better refinance deals now. If your fixed period is ending in the next 6–12 months, it’s worth speaking with a broker to plan ahead. Early preparation can help you avoid “revert rate shock” later on.
Yes, it can. When lenders update their assessment rates in response to RBA cuts, your borrowing capacity may improve, even if your income hasn’t changed. This means you could qualify for more in the future, or access better loan features now. It’s especially relevant if you’re planning to upgrade, invest, or consolidate debt. Even if you’re not ready to act today, knowing where you stand gives you more control over your options when the time is right.
Absolutely. Rates shift fast, and banks often reserve their sharpest rates for brand-new customers. Even if you refinanced recently, you could still be paying more than what’s currently available. Some lenders even offer cashbacks or retention discounts if you ask. A quick rate review with a broker could uncover thousands in potential savings. And since comparison doesn’t cost you anything, it’s a smart way to make sure your recent refinance is still working hard for you.
Start by checking your current rate and comparing it with what’s available. If there’s a gap of 0.5% or more, refinancing could make a meaningful difference, potentially saving you thousands over the life of your loan. Factor in switching costs too, like discharge fees or government charges. But don’t let that put you off. Many lenders are offering refinance cashbacks or discounted legal support, which may offset the costs. A mortgage broker can run the numbers and help you weigh up the pros and cons based on your situation.
