RBA Slashes Cash Rate to 3.60% in Surprise Move
The Reserve Bank of Australia (RBA) has made a surprise 50 basis point rate cut, slashing the official cash rate to 3.60 per cent. This marks two rate cuts in just three meetings and is designed to stimulate broader economic activity and relieve mortgage stress.
The decision surpassed most economists' expectations, with only 12% having predicted a cut this large according to Finder's RBA Cash Rate Survey™. The impact of the dual cuts will be immediate for homeowners, with the average Australian owner-occupier home loan now sitting at $659,920 (ABS, March 2025). This translates to $320 less per month, or $3,840 a year in savings, assuming full lender pass-through.
While this is seen as a step in the right direction by some, others are cautioning that it may not be enough to ease the spike in mortgage stress. Graham Cooke, Head of Consumer Research at Finder, noted that there's still a 40-point difference between the average and lowest rates available, and encouraged borrowers to shop around for better deals.
Additional policy changes, such as a 25 per cent HECS debt reduction and its exclusion from mortgage assessments, combined with a 2.5 per cent boost in borrowing capacity, are expanding access for first home buyers. However, rising property prices may offset these tailwinds. The RBA will be watching global headwinds closely, including supply chain disruptions and international pricing shifts.