Home buyers are likely to have more borrowing capacity following the Reserve Bank of Australia’s move to cut interest rates at its first meeting for 2025.

The RBA cut interest rates by 0.25%, dropping the official cash rate to 4.1%. It is the first rate cut since November 2020.

A number of Australia’s leading banks had already made cuts to fixed rates in the past month in anticipation of the move, and Westpac cut its variable rate by 0.4% on the eve of the RBA meeting.

The RBA cut is the first change in rates since November 2023, when rates were raised to 4.35%.

According to Canstar, the rate cut will reduce weekly repayments by $92 for borrowers with a loan of $600,000. A weekly repayment on a $750,000 loan will drop by $115.

NAB, Westpac, Commonwealth Bank and ANZ have already announced they will pass on the full rate cut, although it can take up to two weeks for changes to be implemented by some banks.