Millions of Australian mortgage holders will see their home loan interest rates drop by 0.25% today following the Reserve Bank’s decision to cut rates last week. Variable home loan customers at Commonwealth Bank and ANZ will benefit from the cut immediately, with Commonwealth also reducing its lowest fixed rate to match its new lowest variable rate of 5.34%.
The other major banks, NAB and Westpac, will implement the rate cut on Monday and Tuesday next week, respectively. Canstar research found that most lenders plan to pass on the full rate cut, though exceptions include Aussie Home Loans, which is only applying a 0.1% reduction to its Aussie Select variable rate mortgages, and Credit Union SA, which may not extend the full cut to a small number of investor loans.
For a borrower with a $600,000 mortgage, minimum monthly repayments have already fallen by $272 this year with the RBA cuts in February, May, and August. However, the actual savings for borrowers may vary depending on how banks apply the cut. Commonwealth, ANZ, and NAB will keep repayments the same unless customers request a reduction, while Westpac automatically adjusts payments for those paying minimum amounts via direct debit.
Canstar data shows only a small proportion of borrowers—14% at Commonwealth, 10% at NAB, and 11% at ANZ—requested lower repayments after the May rate cut. For a $600,000 mortgage over 25 years, not adjusting repayments could still save $76,536 in interest and shorten the mortgage by over three years, even though minimum monthly repayments would remain $272 higher initially.
Sally Tindall, Canstar’s data insights director, urged borrowers to be aware of their options and consider shopping around for the best home loan, noting that leaving repayments unchanged after a rate cut can be a simple way to save thousands in interest. She also highlighted that, despite CBA’s fixed rate cuts, there is still a 0.65 percentage point difference between its lowest fixed rate and the lowest fixed rate available in the market.
