How much will you pocket on your home loan after this rate cut?
The Reserve Bank of Australia (RBA) has finally cut the cash rate by 0.25% and with the majority of banks following suit, you’ll soon have some extra dollars to play with. But how much will you actually save? And should you spend it, save it, or use it to get ahead on your mortgage?
Let’s crunch the numbers and see what this rate cut could mean for your home loan.
How much could you save?
If your bank passes on the full rate cut, here’s how much less you could be paying each year:
What a 0.25% cut looks like in repayments:
| Home Loan Amount | Monthly Repayments ($) | Repayments After Cut ($) | Monthly Repayment Difference ($) | Yearly Repayment Difference ($) |
|---|---|---|---|---|
| $500,000 | $3,436 | $3,357 | -$78 | -$940 |
| $600,000 | $4,123 | $4,029 | -$94 | -$1,128 |
| $750,000 | $5,153 | $5,036 | -$117 | -$1,410 |
| $900,000 | $6,184 | $6,043 | -$141 | -$1,692 |
| $1,000,000 | $6,871 | $6,715 | -$157 | -$1,880 |
| source: mozo.com.au Based on 25 year terms, Owner Occupier Principal & Interest, LVR <80%. Average variable rate of 6.69% as at 27 February 2025, and 6.69% minus 0.25% used for Cash Rate at 4.10% figure. Data accurate as at 27 February 2025 | ||||
What should you do with the extra cash?
Keep it in your pocket: Lower repayments mean more breathing room in your budget. Use it to cover rising living costs, pay down debt, or even treat yourself a little. Why not open a high interest savings account and see how much you can put away?
Pay down your home loan faster: If you keep paying the same amount as before, you’ll slash your loan term and interest costs.
See our home loan repayments calculator
Over 5 years, a loan with a current balance of $500,000 could save over $15,000 in total interest (over a 25 year loan term) just by maintaining pre-cut repayments.
Compare leading home loans
How much could you save on a lower rate?
Boost your offset account: Got an offset account? Parking your savings there could reduce your interest bill even further, keeping thousands of dollars in your pocket over time. Don’t have one? See how much extra the added feature could cost to save you more in the long run.
So, what’s next?
With inflation cooling and borrowing costs easing, this rate cut could be the start of a downward trend. But banks won’t always pass on the full cut, so if you’re not seeing these savings reflected in your repayments, it might be time to compare home loans and switch to a better deal.
* 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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