RBA Cuts Rates to 3.85% – Here’s What It Means for Your Mortgage (and Which Banks Are Dragging Their Feet)
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(Latest updated on May 22, 2025)
The Reserve Bank of Australia (RBA) has officially reduced the cash rate by 0.25%, bringing it down to 3.85% in May 2025. This marks the second rate cut this year—and it’s good news for mortgage holders hoping to lower their repayments. But not all banks are playing fair.
At Loan Nerds, we’ve broken down what this means for you, how much you could save, and what to do if your bank is slow to respond.
What the Rate Cut Means for Borrowers
With the official cash rate now at 3.85%, many variable home loans are moving below 6%, with competitive offers landing under 5.5%. That means real savings for borrowers:
| Loan Size | Monthly Saving |
|---|---|
| $500,000 | $76 |
| $750,000 | $114 |
| $1,000,000 | $152 |
(Source: Canstar, based on an owner-occupier with principal and interest repayments over 25 years.)
But savings don’t happen automatically. Some banks require you to contact them to reduce your repayments—even if they’ve passed on the cut.
Who’s Passed It On?
The big four banks—CBA, ANZ, NAB, and Westpac—have confirmed they will pass on the full 0.25% cut to customers by the end of May or early June.
Other lenders like Macquarie, ING, Suncorp, Bankwest, Athena, and Qudos Bank have followed suit.
But here’s the catch…
75 Banks Still Haven’t Passed It On
Despite growing public pressure and a more competitive market, 75 banks have yet to lower their rates. These lenders remain on the so-called “shame list”, including:
- Adelaide Bank
- Aussie Home Loans
- Bendigo Bank
- Liberty Financial
- Freedom Lend
- La Trobe
- And many more…
These institutions are under the spotlight for failing to provide timely relief to their mortgage customers.
What You Can Do If Your Bank Is On the Shame List
If your lender hasn’t passed on the cut—or if you’re simply unsure—now is the time to act:
- Contact your lender and confirm your current rate.
- Compare your rate to what’s now available. The lowest rates are now in the low 5% range.
- Consider refinancing. Many Australians already are—nearly 100,000 refinanced in Q1 2025 alone.
At Loan Nerds, we compare over 50 lenders to help you refinance with confidence, and often, with no out-of-pocket costs.
Should You Lower Your Repayments?
Lower repayments can offer short-term relief, but maintaining your current payment amount can help you pay off your mortgage faster. Because interest is lower, more of your repayment goes toward the principal.
Need help deciding which is best for you? We can model both scenarios.
What About Savings Rates?
Rate cuts aren’t great for savers. So far, only a couple of banks (like Westpac Group and Teachers Mutual Bank) have reduced their savings rates—but more cuts are expected.
Term deposit rates are also dropping, with many already falling below 5%. If you’re a saver, it’s time to shop around. Loyalty rarely pays when it comes to savings interest.
Will There Be More Cuts?
Most economists expect more RBA rate cuts before the end of 2025, potentially bringing the cash rate closer to 3.1%. The next RBA meeting is scheduled for July, and with inflation softening, further cuts remain on the table.
Loan Nerds’ Advice
Now is the time to review your home loan. Whether your lender has passed on the cut or not, the current market presents a window of opportunity for smart borrowers.
✅ Check your current rate
✅ Ask your lender if the rate cut has been applied
✅ Refinance if your rate is still above 5.5%
Speak to a Mortgage Expert Today
We’ll help you:
- Find a better rate from 50+ lenders
- Lower your repayments or pay off your loan faster
- Navigate bank delays or inaction
📩 Contact us now to find out how much you could save.
Looking to Buy or Refinance your Home Loan?
At Loan Nerds, we are committed to guiding you towards your homeownership goals with expertise and a personal touch. Your dreams matter to us, and we are here to make them a reality.
