Reserve Bank slashes interest rates in major cost of living relief for homeowners: How much Aussies will save on their mortgage
The Reserve Bank has cut interest rates – saving the average borrower $100 a month on repayments.
The cash rate has been eased by 25 basis points, taking it back to 3.85 per cent for the first time since June 2023.
Home borrowers have given relief for the second time this year, with both underlying and headline inflation now within the RBA’s two to three per cent target.
‘Inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance,’ the RBA said on Tuesday.
An owner-occupier borrower with an average $660,000 mortgage would save $107 on their monthly repayments with the latest rate cut.
The Reserve Bank’s language has also softened towards inflation, with keeping unemployment low now its key priority.
‘The board is focused on its mandate to deliver price stability and full employment and will do what it considers necessary to achieve that outcome,’ it said.
While headline inflation has fallen to 2.4 per cent, the Reserve Bank is expecting the consumer price index to climb to 3 per cent by the end of 2025, rising to 3.1 per cent in June 2026 after the federal government’s $75 quarterly electricity rebates end.
The Reserve Bank has cut interest rates – saving the average borrower $100 a month on repayments
Unemployment was also forecast to rise from 4.1 per cent now to 4.3 per cent by Christmas.
The Reserve Bank also warned that Donald Trump’s tariffs were creating uncertainty.
‘World trade policy is changing rapidly, thereby making the central forecasts subject to considerable uncertainty,’ it said.
Financial markets are regarded a rate cut on Tuesday as a 96 per cent chance and see the RBA cutting rates to 3.35 per cent by the end of this year.
