RBA Cuts Rates to 3.6% in August: Third Cut This Year
The Reserve Bank of Australia has cut the cash rate to 3.60 per cent at its August meeting—the third rate cut of 2025. This brings welcome relief to mortgage holders after a prolonged period of elevated rates.
2025 Rate Cut Timeline
The RBA has now cut rates three times in 2025:
- February 2025: Cut to 4.10%
- May 2025: Cut to 3.85%
- August 2025: Cut to 3.60%
Why Did the RBA Cut?
Inflation has continued to moderate, with the latest data showing underlying inflation tracking back toward the RBA's 2-3% target band. The Board noted that economic conditions have softened and the labour market, while still tight, is gradually easing.
What This Means for Mortgage Holders
For a $600,000 mortgage, today's cut translates to savings of approximately $90 per month, or around $1,080 per year. Combined with the previous two cuts, borrowers are now paying roughly $270 per month less than at the start of the year.
Most lenders are expected to pass on the full cut within the coming days.
Are More Cuts Coming?
Financial markets are pricing in the possibility of one more cut before year end, though the RBA has indicated it will remain data-dependent. The next meeting in September will be closely watched.
What Should You Do?
- Check your rate: Ensure your lender passes on the full cut
- Consider your options: Now may be a good time to review fixed vs variable
- Maintain repayments: If you can afford it, keeping payments at the old level builds equity faster
- Talk to a broker: A mortgage broker can help you find the most competitive rate