Interest rates have officially dropped, which is great news. However, you might not be feeling the cash flow relief you were hoping for. Why? Because just because the bank lowers its rate doesn’t mean your repayments automatically follow suit. If you’re still paying the same amount, you’re probably missing out on the opportunity to save. Let’s break it down and see what’s really going on.
Why your repayments might not have dropped
When the RBA lowers interest rates, banks typically follow suit. But how they pass those savings on to you can vary. While some banks will automatically reduce your repayments, that’s not always the case. More often, banks will only reduce repayments if you ask, or if you’re set up for direct debit payments at the minimum rate.
In some instances, banks may choose to keep your repayments the same, which means you’ll pay off your loan faster, saving you money on interest in the long term. This is great for some borrowers, but it doesn’t help those who need cash flow relief right now.
Recent research shows that many people are feeling the financial squeeze. For example, nearly 40% of borrowers need at least $500 less per month to ease their stress, and 14% need $1,000 or more. If you’re feeling the pressure, it’s time to take action and ensure you’re not missing out on lower repayments.
How are the major banks handling it?
So, how are the big banks reacting to the recent rate cuts? Here’s a quick breakdown:
- Westpac: Rates dropped on February 28, but online banking updates were made on March 6. The first repayment after this date will remain the same, but future repayments should adjust automatically—unless you have fixed repayments.
- NAB and CBA: Rates dropped on March 3, but they won’t automatically adjust your repayments. You’ll need to contact them to request the new, lower repayment.
- Other lenders: Some smaller lenders like ME Bank and Beyond Bank have already made the adjustments to lower your repayment without you needing to do anything. Lucky for those borrowers.
What to look for to see how your bank is dealing with the change.
- Check online banking. Banks have made their new rates effective, and these should now be visible under the account details section of your home loan account in your online banking. If you can’t see any changes, check your recent statement to confirm if there has been a change.
- Rate change notifications: Your bank should have sent you a notification explaining how, or if, your loan repayments will change. These might come via email, text, or as a notification within your online banking. Make sure to check all these channels for updates!
How does your rate compare?
Now that you know your new rate, is it competitive? With recent rate cuts, the lowest variable rate for owner-occupiers is now around 5.64%. A competitive rate right now is 5.89%. How does yours compare?
If your rate is higher than this—and especially if it starts with a “6”—you could be overpaying. If you don’t take action, you’ll miss out on the opportunity to save. Refinancing to a lower rate could save you thousands over time, so it’s worth considering a review to ensure you’re not paying more than you need to.
Your next step? Book a free 30-minute finance strategy session!
With rates shifting, it’s a great opportunity to reassess your mortgage and ensure you’re not missing out on savings. If you’d like expert guidance, request a Free 30-Minute Finance Strategy Session where you will:
- Get a realistic understanding of your current situation and how much you could borrow
- Gain insights into the best lending options available to you
- Discover ways to save money on interest, fees, and charges specific to your circumstances
- Get up-to-date information on rates, loan structures, and market conditions
- Learn how we can help you secure a loan that could save you thousands
This no-obligation free session is held with one of our experienced mortgage brokers. It’s not a sales pitch—just real, strategic advice tailored to your situation, so you can make smarter financial decisions.
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Please note, the numbers and assumptions listed in this article are for educational purposes only. Individuals should seek specific advice pertaining to their unique situation and the real estate market before making any decisions.
Trilogy Funding Two is a corporate credit representative (Representative Number 506131) of BLSSA Pty Ltd, ACN 117 651 760 (Australian Credit Licence 391237)
About the Author
Since 2008, David Thomas has built a business aimed at servicing the needs of property investors, owner occupiers and small business owners. David is recognised as one of the top 10 independent mortgage brokerages in the country, David and his team have settled almost billions of dollars worth of residential and investment loans over the last decade.
Known for his straightforward, relatable style, David believes by educating people about property funding; they fare better in the market. By sharing his expertise openly, some of the people he educates will likely become his clients. It's a win-win approach.
David Thomas is a credit representative (Representative Number 506153) of BLSSA Pty Ltd, ACN 117 651 760 (Australian Credit Licence 391237).