Roll Call - Which lenders have reduced their interest rates by 0.25%?
In May 2025, the Reserve Bank of Australia (RBA) reduced the official cash rate by 25 basis points, bringing it down to 3.85%. This move aimed to stimulate the economy amid ongoing cost-of-living pressures and subdued consumer spending.
Swift Response from Major Banks
The major banks—Commonwealth Bank, Westpac, NAB, and ANZ—responded promptly by passing on the full rate cut to their variable home loan customers. NAB was the first to announce the change, with the new rates effective May 30. CBA and ANZ followed suit with the same effective date, while Westpac implemented the cut on June 3.
Other lenders, including Suncorp, ING, AMP, Connective Group, Bluestone, Pepper Money, Advantedge, Newcastle Permanent, MyState Bank, Peoples’ Choice, St George, confirmed they would pass on the full reduction to their customers.
Impact on Borrowers
For borrowers, the rate cut translates to tangible savings. For instance, ANZ’s reduction could lower monthly repayments by approximately $95 on a $600,000 mortgage, amounting to over $1,100 in annual savings.
However, it’s important to note that some banks require customers to request a repayment reduction. Without such a request, repayments may remain at previous levels, potentially allowing borrowers to repay their loans faster.
Market Reactions
The rate cut has had a notable impact on the housing market. Auction clearance rates surged to 73%, up from 65% the previous week, indicating increased buyer confidence. Properties in areas like Ryde and Lane Cove sold significantly above reserve prices, reflecting heightened demand.
Additionally, there’s been a rise in first-time buyers entering the market as investors, a trend known as “rent-vesting,” particularly in New South Wales and Western Australia. This shift suggests that lower interest rates are influencing purchasing strategies.
Looking Ahead
While the rate cut offers immediate relief to borrowers, experts caution that it may exacerbate housing affordability issues in the long term. Increased borrowing capacity can drive up property prices, potentially sidelining first-time buyers. Moreover, systemic issues like housing supply shortages and high construction costs remain unaddressed.
The RBA is expected to consider further rate reductions in the coming months, with market expectations pointing to additional cuts by the end of the year.
What is the cheapest Interest Rate for an offset variable account?
5.39% Principal and Interest Owner Occupier
If you’d like to discuss your current situation, please feel free to book a complimentary discovery call. We’d love to hear from you and see if we can help you secure a home loan that will improve your cash flow and help you achieve your property purchasing goals sooner.
The information contained is general information only and does not consider your objectives, financial situation and needs. Please talk to us if you need a fast-tracked home loan, and we can help you find a lender that has the processes in place to process the application quickly. We strongly recommend that you do not act on any information provided on this website without individual advice from your trusted advisor. You should also obtain a copy of and consider the Product Disclosure Statement for all financial products before making any decision.
Best Foot Forward always tries to make sure all information is accurate. However, when reading our website, please always consider our Disclaimer policy.
