• What the May RBA Rate Cut Means for Mortgage Holders and Small Business Owners

RBA Cuts Interest Rates to 3.85% – What It Means for You

On May 20th, the Reserve Bank of Australia (RBA) cut the official cash rate by 0.25%, bringing it down to 3.85%. Now that we’ve seen how lenders have responded, let’s break down what this change really means—and why it’s important to look beyond just one rate cut when planning ahead and what the RBA rate cut means for mortgages.

Why the Rate Cut?

• Inflation is easing
  Price increases have slowed and are now within the RBA’s target range of 2–3%. That’s a positive sign for the economy.

• Jobs are holding steady
  Unemployment remains low, giving the RBA confidence to ease rates without risking a spike in job losses.

• The goal
  The RBA is aiming to strike a balance: keep inflation low while supporting jobs and the wider economy.

Why Jobs Matter in a Rate Cut

• • When inflation starts to come down, it often means people and businesses are spending less. That can slow down the economy and—if it goes too far—can lead to job losses.

• • That’s why the RBA has been so cautious. Their goal isn’t just to lower inflation—it’s to do it without putting too many people out of work. A sudden rise in unemployment can be just as damaging as high inflation, especially for families and small business owners.

• • While many households and businesses are still doing it tough, the RBA has noted that inflation is easing and unemployment figures remain relatively low. That’s why they felt confident enough to cut rates in May—signalling that, in their view, their strategy is on track: bringing inflation down while trying to avoid widespread job losses or further strain on small businesses

For Mortgage Holders

• • A lower cash rate could mean lower loan repayments—especially if you’re on a variable rate or considering refinancing.

  • Lenders outside the Big 4 have acted faster than major banks, in many cases applying rate cuts within days, not weeks.

  • Now is a great time to review your home loan and ensure you’re not overpaying.

For Small Business Owners

• Borrowing costs may come down, making it a good time to assess finance for cash flow or investment.

• Be aware: global uncertainty remains, so it’s wise to stay flexible and informed.

Caution: Don’t Wait Too Long

• Too many people wait until they’re under financial pressure before seeking help.

• If your repayments are more than 14 days late, it’s reported on your credit file and stays there for two years, limiting your future options.

• We can still improve your situation after arrears, but acting before they’re recorded can open up a wider range of lenders and sharper rates.

So, What Should You Do Now?

• Talk to your broker or lender about how this rate cut might benefit you.

• Consider refinancing or at least review your home loan after the rate cut.—you might unlock real savings.

• Even if you’re not ready to act, a quick check-in gives you clarity and control.

WhiteStar’s mortgage brokers are here to help. If you’re unsure how this affects you, or just want to know where you stand, chat with our team. We’ll help you explore your options—whether you’re ready to move now or simply want to understand refinancing after the RBA decision. There’s no pressure—just expert advice to help you stay ahead

Give us a call 1300 652 842 , jump on live chat, or send and email through your current rate and loan balance—we’ll do the rest.

Or if you’d prefer to start with a bit more info, you can also Download our Free  Refinance Guide to see what’s involved and what to watch out for.

We’re here to help when you’re ready.