Lenders passing on rate cuts, but repayment reductions not automatic for most
Millions of Australian mortgage holders could be missing out on savings from the Reserve Bank’s recent rate cut, as banks aren’t automatically reducing repayments – prompting a reminder from financial comparison site Mozo for borrowers to take action.
“It’s a clear case of ‘don’t ask, don’t get’,” said Mozo personal finance expert Rachel Wastell (pictured above). “Most borrowers assume they will pay less when rates are cut, but unless you take action, your lender could leave your direct debit amount exactly where it is, even if your rate has fallen.”
While maintaining higher repayments can help reduce debt faster, Wastell pointed out that those facing financial pressure could be missing out on much-needed cash.
Recent Australian Bureau of Statistics data shows that 52% of owner-occupier home loans are with Commonwealth Bank, NAB, or ANZ. All three banks have passed on the full 25-basis-point cut to variable rates, but none automatically adjust direct debit repayments unless requested.
In contrast, Westpac reduces minimum repayments automatically for eligible customers. Macquarie also adjusts repayments in line with rate cuts without needing borrower approval.
🏡 Home loan repayments still the same… even after a rate cut? 🤔
— mozo.com.au (@mozo_au) June 4, 2025
You’re not imagining it. Some lenders, including most of the Big Four, won’t automatically reduce your repayments when rates drop 💸 https://t.co/B3PuVKnrUG pic.twitter.com/jPeC1OwH3F
Even when requested, changes may not take effect immediately. Wastell noted that delays of up to two repayment cycles are possible. One ANZ customer reportedly had to give 37 days’ notice before a new repayment was implemented. “That lag can add up to hundreds of dollars in extra repayments,” Wastell said.
Mozo raised concerns that many customers may be unaware they need to take action, especially as some banks describe unchanged repayments as a borrower-driven decision.
“Following February’s rate cut, around 14% of eligible customers took this opportunity to reduce their direct debit to align with the lower repayment – thereby freeing up their current cash flow,” said Michael Baumann, Commonwealth Bank’s home buying executive general manager.
NAB also stated that most of its customers opted to maintain their repayment levels. “More than 95% of NAB customers have kept their repayments at the same level to pay down their home loan quicker and save more in the long term,” said Denton Pugh, NAB executive for home lending.
However, Wastell questioned whether this is truly a choice. “Banks say customers are choosing not to lower repayments, but we’re asking if they even know they need to?” she said.
Mozo is encouraging borrowers to review their repayment settings and calculate what they should be paying under the new rate. “Don’t assume your bank will do it for you,” Wastell said. “If your lender is making it hard to access the savings from a rate cut, it might be time to compare your options.”
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