Borrowers Gain Relief as RBA Cuts Cash Rate to 3.60%

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The Reserve Bank of Australia (RBA) delivered good news today, cutting the official cash rate by 25 basis points to 3.60%, marking its third reduction this year and reaching a two-year low.

For homeowners, this is a welcome reprieve. Borrowers with a $500,000 loan could save around $74 per month (roughly $272 in total this year), while those with a $700,000 mortgage might see annual savings of $1,104—assuming lenders pass the cut on in full. Many lenders are expected to act swiftly, and refinancing is already gaining momentum.

This move was widely expected—markets had been bracing for it after inflation dipped into the RBA’s 2–3% target band, with core inflation easing to about 2.7% and headline inflation at 2.1% The labour market has also softened; unemployment rose to 4.3% in June, up from earlier lows.

Still, the RBA isn’t popping the champagne just yet. Officials noted productivity remains sluggish, with a downgraded forecast of long-term productivity growth—from 1% down to 0.7%. That means slower income gains ahead and a careful approach to further easing.

What’s Next?

Markets are pricing in another rate cut potentially in November, and maybe one more by early 2026, possibly bringing the rate down further toward 3.10%

It's a relief for borrowers—but the RBA is signaling caution. The road ahead depends on how inflation, wages, and productivity trends evolve. In short: enjoy the short-term savings, but keep an eye on the broader economic picture.

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