MFAA welcomes Reserve Bank’s 0.25% reduction in the official cash rate

The Mortgage & Finance Association of Australia welcomes the Reserve Bank of Australia’s decision today to reduce the official cash rate by 0.25% to 3.85% as further good news for borrowers, following the RBA’s first rate cut back in February 2025.

MFAA CEO Anja Pannek said this second rate cut would alleviate financial pressure on home loan borrowers, although the effects of lower interest rates would still take some time to flow through.

“Despite global economic headwinds, now that headline inflation is within the RBA’s target, there was a widely held expectation that the RBA would lower the official cash rate in May,” Ms Pannek said.

“After 13 interest rate rises between May 2022 and November 2023, the Reserve Bank’s move today will help many borrowers.

“Our members are dedicated to serving the bests interests of their clients. They expect lenders to pass the rate cuts on in full.
We’ve seen all major banks pass the rate cut on in full post the RBA announcement. We expect all lenders will follow suit.”

MFAA modelling shows that the 0.25% rate cut means an average borrower with an average mortgage of $660,000 could save around $106 a month on their monthly home loan repayments.

Ms Pannek said with a positive outlook in terms of potential future interest rate reductions, refinancing activity has increased, with the ABS reporting a 5% increase in the number of owner occupier mortgages being refinanced to other lenders in the March 2025 quarter compared to the December 24 quarter.

“This is a great time for borrowers to contact an MFAA accredited broker and discuss their home loan financing options – whether they are buying their first home, refinancing, investing in property, or seeking a better deal with their existing lender.”

The data the MFAA has compiled in a number of reports, including the Value of Mortgage and Finance Broking 2025 Report (with the support of Deloitte), the February 2025 Member Sentiment Survey, and the December 2024 quarterly market share demonstrates the important role brokers play in supporting Australians no matter where they are on their property journey.

“Brokers are responsible for settling more than 76% of all new residential home loans but their role goes beyond the transaction,” Ms Pannek said.

“Brokers improve clients’ financial literacy, get them ‘finance ready’ so they are able to reprice or refinance their mortgage when the time is right, and also assist clients to navigate the various government schemes and grants available for first home buyers, using tools such as our new Home Buying Schemes in Australia guide.”

The February 2025 Member Sentiment Survey showed that:

• 98% of brokers had helped their clients secure a discount;

• 97% helped their clients refinance to a new lender;

• 87% helped clients with budgeting strategies; and

• 68% helped clients understand hardship options.

Ms Pannek said there was a growing cautious optimism among borrowers, with the survey revealing that half of brokers reporting their clients felt “neutral” about their financial outlook and a third felt “positive”, with the interest rate environment being one of the main contributing factors.

However, while the number of brokers reporting that more than 10% of their clients are feeling stressed has halved in the past 12 months from 51% to 24%, and fewer clients are finding it harder to refinance (42% compared to 83% 12 months ago), Ms Pannek said the serviceability buffer still remains a significant barrier for some borrowers.

“This is where brokers can make a crucial difference, using their skills and knowledge of the market to help Australians achieve their financial goals.”