Millions of Aussies to save $2500+ annually after Reserve Bank of Australia delivers second rate cut
The average Aussie household will save more than $2500 annually after the Reserve Bank of Australia delivered its second interest rate cut of 2025.
The RBA on Tuesday lowered the cash rate from 4.1 per cent to 3.85 per cent in a move largely predicted by money markets.
It follows high interest rates and sticky post-pandemic inflation that ate into the buying power of many Aussies doing it tough.
After the central bank's recent decision, an Aussie with the average owner-occupier home loan of $659,920 would save $213 monthly and $2,553 annually from the two rate cuts this year, according to comparison site Finder.
Many economists and banks are predicting two more 0.25 per cent rate cuts this year, bringing the total monthly savings to $420 and $5,044 annually compared to last year.
Finder's head of consumer research Graham Cooke said while the recent cuts will ease some financial stress for households, the pressures from the past few years of high rates still weighs on mortgage holders.
'Frankly, two cuts might not be enough to ease the spike in mortgage stress we've seen since the cash rate started rising again in May 2022,' Mr Cooke said in a statement.
'But it's a step in the right direction and it's great news for homeowners. It's two down and maybe two more to go this year.'
The recent rate cut will also deliver a 'well deserved boost' for millions of Aussies who had to bear the brunt of post-pandemic inflation, former Sunrise host and Compare the Market economic director David 'Kochie' Koch said.
'For years, the Reserve Bank has been lecturing us saying 'we got to get inflation under control, we've all got to do our bit, we've got to tighten our belts, we've got to cut back household spending',' Mr Koch said.
'That's what we have done, now the inflation target is down within the Reserve Bank's two to three per cent target range. We absolutely should be rewarded for doing the right thing.'
He said Aussies had grappled with roughly $18,000 more each year in home loan repayments since rates peaked in late 2023 and were held for almost a year and a half.
'That's a heavy burden when the cost of everything else from insurances to council rates and energy bills are also causing a lot of pain,' Mr Koch said.
Westpac, NAB, ANZ and Commonwealth Bank revealed shortly after the RBA's rates call they would all pass the rate cut for the millions of Aussie homeowners.
Commonwealth Bank of Australia and Westpac are each expecting two more 0.25 per cent interest rate cuts in 2025 to bring the cash rate down to 3.35 per cent.
ANZ is expecting three consecutive cuts including the May call, bringing the cash rate to 3.35 per cent in August.
NAB has remained an outlier as it was predicting a 0.5 per cent cash rate cut on Tuesday and forecast the cash rate to drop to 2.85 per cent by the end of 2025.
RBA Governor Michele Bullock said the central bank's decision was a "confident cut", but noted she remained on watch for economic uncertainty from the US-instigated trade war.
"I think it's a confident cut in the sense that we think this is the right decision at this point in time," Ms Bullock told reporters.
"Where this leads us in the future is a little more uncertain. I'd have to say probably a lot more uncertain, given everything that's going on."
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