Reserve Bank of Australia (RBA) lowers the cash rate by 25 basis points to 3.60%, which is a clear signal for property buyers and borrowers.
On 12 August 2025, the Reserve Bank of Australia lowered the official cash rate by 0.25 percentage points to 3.60% — the third cut this year. The decision was unanimous and follows softer inflation and slightly easing labour-market conditions that together convinced the Board to continue a cautious easing path.
Thank you for reading this post, don't forget to subscribe!What this means in plain terms: mortgage rates are likely to fall, borrowing costs for many Aussies will ease, and buyer affordability for properties will improve, but the timing and scale of those benefits depend on individual lenders and borrower choices. The RBA’s cash rate target is published with an effective date on the RBA, and the next policy update is scheduled after the next board meeting.
Immediate Effects for Home Loan Customers
- Rate move: The cash rate has dropped to 3.60% (effective 13 Aug 2025).
- Banks passing on cuts: Many major lenders typically pass cuts to variable-rate borrowers, but not always immediately. Expect announcements from the big banks over the coming days.
- Typical savings: Estimates from market reporting show monthly repayments can fall materially if lenders pass on cuts; for example, household savings range widely depending on loan size and term.
What property buyers and investors should consider now
- Refinance window: If you’re on a higher variable rate, compare offers. Even modest rate moves can produce substantial lifetime savings, but weigh fees, break costs (if on a fixed rate), and the hassle factor.
- Repayment choice: If lenders pass the cut, you can either reduce monthly repayments (short-term breathing room) or keep paying the same amount to repay principal faster and shorten your loan term. That choice affects long-term interest paid.
- Market effect on prices: Lower rates can nudge demand up, particularly among first-time buyers and refinancers. Local market supply fundamentals and affordability constraints will determine how much prices move; don’t assume across-the-board rises.
- Property Investors: Cheaper finance can improve cash flow projections, but also consider rental market fundamentals, vacancy rates, and longer-term yield assumptions before committing.
Read More: Top 10 Mistakes First Home Buyers Make in Australia
Practical Action Right Now Following The RBA Rate Cut
- If you’re a borrower, contact your lender or mortgage broker this week to confirm when and how the cut will be applied to your loan, and use any windfall to reduce principal where possible.
- If you’re considering buying, get pre-approval and lock in a strategy (refinancing vs. new borrowing) so you can move quickly if the right property appears.
- If you’re an investor, run updated sensitivity analyses on yield and serviceability under lower-rate scenarios, and keep an eye on rental demand in your target suburbs.
"It will be a relief for many Australians, but investors need to make their moves quickly."
Daniel Chadrawy
Head of Sales and Business Development
Liviti Property
The Board noted inflation metrics are moderating toward the RBA’s 2–3% target and that labour market pressures are easing, making further gradual cuts appropriate under current forecasts. At the same time, the RBA highlighted ongoing uncertainty in productivity and global conditions, so decisions remain data-dependent.
Final Takeaways of RBA’s Rate Cut at 3.60%
- This rate cut offers real near-term relief for many mortgage holders and creates opportunity for buyers who have their financing in order.
- The full benefit depends on how quickly lenders pass the cut and on borrower choices (reduce repayments vs repay extra).
- Liviti Property can help: whether you need a quick sanity check of your repayments, a mortgage broker referral, or a targeted property search, reach out and we’ll tailor the advice to your situation.
