Australian home buyers are set to gain more borrowing power after the Reserve Bank of Australia (RBA) cut interest rates at its first meeting of 2025.

The RBA lowered the official cash rate by 0.25% to 4.1%, marking the first rate cut since November 2020.

Major banks had already reduced fixed rates in anticipation, with Westpac cutting its variable rate by 0.4% just before the announcement.

This is the first change in rates since November 2023, when they were raised to 4.35%.

According to Canstar, the cut will reduce weekly mortgage repayments by $92 on a $600,000 loan and $115 on a $750,000 loan.

NAB, Westpac, Commonwealth Bank, and ANZ have confirmed they will pass on the full rate cut, though it may take up to two weeks for some banks to implement the changes.