Mario Rehayem, CEO of Pepper Money, says the rate cut comes at a critical time for many Australians who have been managing the impact of rising living pressures.

“This decision is a step in the right direction. While many households continue to face financial challenges, today’s rate cut will help ease some of the pressure and provide much-needed relief," said Rehayem.

As of September 2024, the average mortgage in Australia was $642,121, according to the Australian Bureau of Statistics (ABS) and as of December 2024, Australia's average interest rates were around 6.1% for owner-occupiers.

"For a borrower with a $600,000 mortgage with the average interest rate of 6.1%, this 0.25% reduction could mean a decrease of approximately $96 in monthly repayments and approximately 

$1,156 in yearly savings. While it may seem like a modest saving, it can make a meaningful difference, especially when combined with other cost-of-living pressures."

Rehayem noted that while the economy has shown resilience, inflationary pressures remain a concern, “In this environment, any measure that provides financial breathing room is positive after continuous rate rises and the cash rate halt.”

Many households have been managing tight budgets amid rising costs, and any reduction in repayments can make a meaningful difference. Ensuring borrowers benefit from this cut will help them regain some financial stability and confidence in their future planning.

“For mortgage brokers, now is the time to engage with clients and review their current loan. It’s important for brokers to be proactive and reach out to existing customers, help them understand what this rate cut means for them, and conduct home loan health checks to ensure they’re on the best possible rate,” Rehayem advised.

Pepper Money has announced it will be decreasing the variable interest rate for existing residential, commercial, construction, and SMSF loans by 0.25% p.a effective 5 March 2025.

While today’s rate cut is welcomed, Rehayem emphasised the importance of supporting customers. “We strongly encourage anyone who is experiencing hardship to contact us, so we can help with a solution that suits their needs.”