Unless you’re living off-grid on a distant sun-drenched island (nice choice), you’ve probably heard the good news: interest rates have gone down (twice) in 2025. Finally.
But then you check your bank account and your mortgage repayments look exactly the same. Or, maybe you’re the opposite and they’ve suddenly started to look different. So, what gives?
Turns out, whether or not your mortgage repayments change automatically when interest rates drop depends on your lender. So knowing what to expect from your lender can help you stay one step ahead.
Let’s break down how the most popular banks are responding to rate cuts so you take control and make sure your repayments are working for YOU.
Does my bank automatically adjust my repayments when interest rates drop? Well, it depends on the bank…
Every lender treats repayment changes differently when interest rates go down.
Some reduce repayments automatically in line with the new minimum, while others keep your repayments the same and ask you to reach out to request the change (we know, nothing’s ever straightforward in the world of home loans).
But don’t worry, if your repayments have stayed the same you’re not throwing away money. You’ll just be chipping away at more of your principal balance – and this could be a good thing if that’s your goal.
So, wondering where your bank falls?
A glance at the most popular banks
Do your rates drop or stay unchanged (until you reach out)?
- ANZRepayment unchanged
- Commonwealth BankRepayment unchanged
- NAB Repayment unchanged
- WestpacAutomatically decrease
- Bank of MelbourneAutomatically decrease
- Bankwest Automatically decrease
- INGAutomatically decrease
- MacquarieAutomatically decrease
- ME BankAutomatically decrease
- People’s ChoiceRepayment unchanged
- St GeorgeAutomatically decrease
- SuncorpRepayment unchanged
- ubankAutomatically decrease
- WestpacAutomatically decrease
Can’t see your bank in the list above? Well, you can usually tell by monitoring the money going out of your account and towards your home loan. Has the amount changed or stayed the same?
If you’re unsure, you can always reach out to your bank directly and ask.
And if you’re with one of the lenders where your repayment has remained unchanged (and you’d really like to see it change) this is your sign to reach out.
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So, why don’t all banks automatically change repayments?
To put it bluntly, the banks make their own rules.
But it’s super important to remember that interest rates and repayments aren’t the same thing. So they’re not required to lower your repayments just because interest rates drop.
Let’s scratch up on some definitions…
Let’s start with interest rates
Interest rates are a percentage-based charge based on the size of your home loan. In other words, the price you pay to borrow money.
Changes to your variable interest rate on your home loan are often driven by what the Reserve Bank of Australia does to the cash rate.
When the interest rate on your home loan decreases, the interest charged will reduce as soon as your lender passes on the rate cut, no matter which bank you’re with (but not necessarily your repayments, there’s a difference).
Now let’s talk repayments
‘Repayments’ is exactly how it sounds: it’s the amount you repay each month (or week or fortnight). There are two types of repayment amounts:
- Minimum repayment amount: the minimum amount you need to pay each month (or fortnight or week) to stay on track and pay off your loan in full over the term. As your interest rate decreases, so does the minimum amount you need to pay each month (and vice versa as rates go up).
- Actual repayment amount: the amount you’re actually paying. Typically, this is set at the minimum when you take out your home loan, but as things change (like your interest rate) this may no longer be the case. As rates go down and your minimum repayment comes down, lenders don’t all act the same. Some keep your repayment at the same amount as before (so you pay more than the minimum) while others might reduce your repayments to match the minimum.
Feeling confused? You’re certainly not the first one. This stuff is complicated. But it’s also your money (typically a lot of your money) so it’s important you know what’s happening with it.
If in doubt and contacting a lender directly feels overwhelming (we get it) our friendly mortgage brokers are here to help.
To recap: If you’re on a variable rate, your interest rate will drop, but your repayments might not
If you’re on a variable rate, your interest rate will automatically go down if your lender cuts rates.
But your repayments might stay the same, depending on your lender’s process (check the big and popular lenders above).
Keeping your repayments the same can be a good thing (you pay off more of your home loan, faster). Or you might prefer to lower your repayments to ease the pressure.
It’s entirely up to you and your situation.
Fixed rate? You’re locked in (at least for now)
If you’re on a fixed rate, your interest rate and repayments won’t change when rates drop.
Yep, you’re locked into your agreed interest rate and repayment amount until the fixed rate term ends.
But hey, maybe you benefited from a nice rate in a time when rates were rising – and you could get a nice drop once your fixed term is over.
Once your fixed period ends, you can re-evaluate your options and potentially benefit from lower rates (speak with a mortgage broker if this sounds like you).
How you can take control of your home loan repayments
Here’s four simple steps to take control of your home loan when rates are changing.
- Check in with your lender to see what their process is. Do they automatically adjust repayments or wait for you to request the adjustment? The above guide will help you if you’re with one of the popular banks.
- Check in with your goals and home loan. Want to get ahead? Maybe keep your repayments higher, which means you’ll chip away at more of your principal balance. Need more cash flow? You can request to reduce your repayments in line with the interest rates (if this hasn’t happened automatically).
- Adjust your repayments if you need to. This can usually be done online or by contacting your bank. If in doubt, our mortgage brokers are here to help.
- Consider refinancing. If you’re wondering whether your home loan is still working for you (or it’s been a while since you’ve refinanced) it might be time to weigh it up. Learn more about whether you should refinance if interest rates drop.
Questions on interest rate cuts?
Will interest rates continue to drop?
We can’t say for sure. But we can look at predictions from the big four banks and leading economists to draw some insights. Current predictions are looking promising for more rate cuts in 2025 and 2026. Learn more about what’s happening in 2025: How much will interest rates go down?
Generally, do all lenders drop rates by the same amount?
It’s not easy to predict. But historically, lenders have behaved differently (generally not always the same as the RBA). To keep an eye on what’s currently happening with interest rates, check out our interest rate tracker. We continue to update this list.
How soon after rate drops are announced do they kick in?
When banks and lenders announce their rate cuts they’ll include an effective date. This is when your home loan will begin to be calculated at the new rate. But remember, your repayments may not change immediately (chat with a broker if you’re in doubt).
Need a hand working out the right home loan repayment amount for your goals and situation?
Keeping an eye on your home loan, interest rate and repayments is a simple way to make sure it’s still working for you.
Based on your situation, you might choose to leave your repayments as they are and get ahead on your loan. Or, you might prefer the extra breathing room of lower monthly repayments.
Either way, a mortgage broker can help work out what’s right for you.
No pressure. No jargon. It’s as easy as 1, 2, 3…
- Book a chat with a friendly Finspo expert (online, phew!)
- Tell us about yourself and provide any additional info
- We’ll do the heavy lifting and present you with some loan options and a recommendation.