RBA interest rates live updates: Central bank delivers third rate cut to help struggling homeowners

Treasurer Jim Chalmers has welcomed the RBA’s decision to slash the official cash rate to 3.6 per cent, celebrating the lowest interest rate in more than two years.

“This means three interest rate cuts in six months,” Dr Chalmers said.

“It means the lowest interest rates for more than two years.

“This is very welcome relief for millions of Australians.

“It will put more money in the pockets of people who are under pressure.

“It means $109 a month for every $700,000 owed, and the three cuts this year together are about $330 a month, or almost $4000 a year.”

Today’s offical rate cut is good news on two fronts for homeowners - lower repayments and equity growth in their home.

Compare the Market property spokesman Andrew Winter said cheaper rates, improved buyer confidence and ongoing supply issues could further inflate property values in parts of the country.

“Homeowners are about to feel a lot better off because not only are their repayments getting reduced, they’re benefiting from an equity boost as well,” Mr Winter said.

“It is important to remember that equity is locked up in your home until you decide to sell, and if you decide to upsize your home within the next year, you may find you end up needing to spend more than you planned, even with the extra equity.

“If you’re still paying down your loan you need to make sure you’re on a competitive interest rate to maximise your savings.”

A survey of homeowners by the comparison site found almost 20 per cent of respondents were looking to sell in the next 12 months.

A further 37 per cent said they would consider selling in the next two to three years.

Van Eck’s head of investments and capital markets Russel Chesler said there is still plenty of strength in the Aussie economy and “we’d need to see how the existing rate cuts play out before factoring in any additional easing”.

He said too many rate cuts run the risk of increasing inflation and possibly over-heating the property market, making it harder for first-homebuyers to get a foot on the ladder.

“There has also been growth in consumer spending, with the ABS reporting four straight quarters of volume growth in retail sales,” Mr Chesler said.

Oliver Hume chief economist Matt Bell said the cut was good news for all property markets.

“The strong increase in land sales numbers we saw across all markets in the June quarter on the back of the February and May rate cuts was put at some risk with the surprise hold by the RBA in July,” Mr Bell said,

“The surprise no-cut in July slowed some of the recovery in land markets and house price growth.

“But this decision is likely to see increases in activity in both new and established markets in the remainder of the year.

“The two rates cuts to date have delivered six consecutive months of dwelling price growth and one of the biggest jumps in quarterly land sales in what has traditionally been the country’s largest land market, Melbourne.”

Despite global headwinds and the lingering threat of Donald Trump’s tariff agenda, the RBA said Australia’s private demand appears to have been recovering gradually, real household incomes have picked up and some measures of financial conditions have eased.

“Uncertainty in the world economy remains elevated,” the board said in a statement releasd just minutes ago.

“There is a little more clarity on the scope and scale of US tariffs and policy responses in other countries, suggesting that more extreme outcomes are likely to be avoided.

“Trade policy developments are nevertheless still expected to have an adverse effect on global economic activity, and there remains a risk that households and firms delay expenditure pending still greater clarity on the outlook.

“As in May, the forecasts assume that both effects weigh on activity and inflation in Australia for a period.”

Inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and potential supply closer towards balance.

“In the June quarter, trimmed mean inflation over the year fell to 2.7 per cent, broadly as expected in May. Headline inflation, which has partly been affected by temporary cost of living relief measures, was 2.1 per cent, also as forecast.

“Updated staff forecasts for the August meeting suggest that underlying inflation will continue to moderate to around the midpoint of the 2–3 per cent range, with the cash rate assumed to follow a gradual easing path.”

The RBA has decided the time is right and delivered millions of struggling homeowners the news they wanted to hear.

After pausing in July the board has just handed down a 25 pasis point cut, taking the official cash rate to 3.6 per cent.

Those with an average $600,000 mortgage can expect to save about $90 a month on their replayments.

Last month’s vote by the rate-setting board was split 6-3 to hold.

Today’s vote was unanimous for a cut.

Australia’s jobs market delivered a roaring performance through 2024 with employment growth consistently smashing expectations.

That has eased off a little in 2025 but is still very good by historical standards.

Unemployment was 4.3 per cent in June, up 0.2 percentage points on May.

The RBA wants to keep and eye on the jobless rate and predicts a gentle rise as inflation slows. Yet the central bank also wants to make sure unemployment does not jump fast.

“We do not believe this alone is going to be ringing any alarm bells at the RBA,” VanEck’s Russel Chesler said when the jobs data was released.

“It is only one month of data, and with the number of job ads increasing by 1.8 per cent in June 2025, there is no clear indication that unemployment will increase further.”

Read more here

We’re just 15 minutes away from hearing what the RBA has decided to do about official rates.

Will it be another hold, or has the board decided the time is right for a little extra relief for struggling households?

We’ll find out at 2.30pm AEST.

There was plenty of complaining from analysts and commentators five weeks ago when they wrongly predicted a July rate cut and the RBA said: Not yet.

But the Reserve had good reasons to be cautious.

The wisest owls at the RBA know the lessons of history — inflation will bounce back with a vengeance when you take your eye off the ball.

With a few more weeks, and updated data showing inflation is on track, the RBA has a stronger case to cut today.

Perhaps the lesson is that much of the talk in the lead up to the last decision was wishful thinking and people moving as a herd.

Those economists who got it wrong should avoid attacking the RBA and instead resist the urge to get everyone’s hopes up.

Read the July opinion piece that got people talking here

The answer is a murky: It depends.

Brett Sutton from mortgage brokers Two Red Shoes said fixed rates were all the rage four years ago because Australia’s official cash rate had fallen to just 0.1 per cent at the height of the COVID-19 pandemic.

Most banks were offering rates that started with a ‘1’.

Today, fixed rates - especially two to three-year options - are close to variable rates or only slightly lower.

“Many borrowers believe it won’t be long before rates drop to those levels, or even lower, with predicted RBA cuts,” Mr Sutton said.

“Borrowers aren’t chasing small discounts; they’re betting on bigger rate cuts to come. Unless fixed rates are priced well below variable rates, most people aren’t rushing to lock in.”

But could it work for you, your loan and your budget?

“It really comes down to perceived value, personal circumstances and your view on where rates are heading,” he said.

“At the moment, the best fixed rates are often only about 0.5 per cent lower than the standard variable rate.

“For many, that gap isn’t enough to justify locking in, especially if they think rates will keep falling. Right now, most borrowers see flexibility as worth more than a half-per cent saving.

“Some are still choosing to fix for peace of mind, but most are waiting to see how far variable rates might drop.”