First RBA cut in 4 years set to drive refinancing frenzy

Today, the Reserve Bank of Australia (RBA) has cut the cash rate by 25 basis points to 4.10% – marking the first rate cut in over four years – and Mozo research shows many Aussie mortgage holders will now be on the hunt for a new home loan.

The rate cut comes after the central bank’s most aggressive cash rate hiking cycle since the early 1990s, which began in May 2022, and led to a whopping 4.00% being added to the cash rate in just under 2 years. 

“This rate cut is the first rate move in over a year, and the first cut since 2020, and it comes at a crucial time – when many Australian homeowners are feeling the compound pressure of thirteen rate hikes,” says Rachel Wastell, Mozo Money Expert. 

“While some borrowers are ready to act, others are choosing to stay put, possibly waiting for more clarity on future rate movements – but whether you’re looking to refinance now or down the track, it’s crucial to shop around, compare rates, and check if your bank is passing on this RBA cut in full.”

In light of the cut, Mozo has launched a new live blog and RBA Rate Match table, to help borrowers track which lenders have passed on the RBA’s rate cut in full, and which have not. 

“Just because the RBA moves doesn’t mean your lender will, so it will pay to keep an eye on rate movements following today’s decision,” says Wastell.

“Make sure the banks you're considering refinancing to are actually passing on the full RBA rate cuts – because you don’t want to miss out on the best deal just because you haven’t checked your options.”

However, as the first cut in such a long time, Mozo believes most banks are likely to do the right thing by borrowers and follow the RBA in lockstep.

Refinancing Trends Post-RBA Rate Cut

According to Mozo’s survey data, half of Australian mortgage holders are now either considering or planning to refinance after the cut decision. 35% of Australian borrowers are now considering refinancing their home loans in response to the February cut, while 14% are definitely planning to refinance.

When it comes to those not looking to switch up their loans, 47% are not planning to refinance at all, and 4% have recently done so.

Are you planning to refinance your home loan if rates decrease after February 2025?

“Mozo research shows that a significant number of homeowners will be weighing their options carefully following the RBA's rate cut – a clear split in borrower sentiment,” says Wastell.

“While many are ready to act and refinance, a significant portion of borrowers are unsure if the reduction is enough to justify making a change. It really highlights the importance of carefully evaluating your options, even if you’re not planning to refinance immediately.”

Refinancers could double savings by switching to a Mozo winner

While many borrowers are hoping to secure a better deal with the RBA’s rate cut, this presents an opportunity to save even more by switching to low-cost home loans.

Mozo’s recent Home Loan Report shows that borrowers could give themselves a rate cut by switching to one of the lowest cost home loans from 444 home loans on offer across Australia – the winners of the Mozo Experts Choice Awards.

Looking at 2-Year Fixed Rates:

Borrowers who choose a Mozo award-winning fixed rate can secure an average rate of 5.72% p.a. This represents a saving of 0.32% (32 basis points) compared to the average fixed rate of 6.04% p.a. across all lenders in the Mozo database. As the RBA cut by only 0.25% (25 basis points) today, this is an even bigger saving than the RBA cut.

Looking at Variable Rates:

For variable rates, borrowers can secure an average rate of 6.01% by opting for one of Mozo’s low-cost Home Loan Experts Choice Award winners. This is a saving of 0.70% (70 basis points) compared to the average variable rate of 6.71% across all lenders in the Mozo database. That’s more than double the RBA’s 0.25% (25 basis point) cut made today.

In dollars, that's about $217 you could save in monthly repayments on a $500k loan by switching from the average rate or $358 by switching from the average Big Four rate.

Looking Ahead: The Future of Mortgage Rates

“Even with this recent rate cut, it's important to keep in mind that the future of interest rates remains uncertain, influenced by shifting economic conditions, inflation, and geopolitical factors,” says Wastell.

“As we saw with the previous cycle of rate hikes, things can change rapidly. Homeowners need to stay proactive and be ready to manage their home loans, especially as interest rates continue to fluctuate.”

“Refinancing isn’t just about chasing a lower interest rate – it’s about getting a complete view of your financial situation. Consider all the factors, including loan fees, repayment flexibility, and features available with other lenders.” 

“Remember, the best deal may not always come from your current bank.”

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Notes:   Mozo commissioned a nationally representative survey of 1,021 Australian mortgage holders - conducted between December 2024 and January 2025 via PureProfile. 

Mozo’s average variable rates for owner occupier, principal & interest home loans, interest paid over a 25 year loan term, 80% LVR, $500,000 loan amount. Average for Mozo Experts Choice Awards Winners based on the rates of Mozo Experts Choice Award winning products on 12 Feb 2025, using the same criteria.