What a rate cut actually does to your repayment

A cash rate cut is announced at half past two on a Tuesday and by Wednesday morning the headlines have already told you what your repayment will be. The headlines are usually wrong, because they assume something no lender has promised: that the whole cut reaches you, and that it reaches you now.

Three things happen between the cut and you

• The lender decides how much of the cut to pass on. Partial pass-throughs are routine and are not announced loudly.
• The lender decides when. An effective date two to four weeks out is common, and it is the lender's choice, not a regulation.
• Your repayment does not move unless you ask. Most lenders hold your direct debit at the old amount, which quietly pays the loan down faster — good for you, invisible to you.

That third point is the one borrowers get most annoyed about, and it is the one worth leaving alone. If you can afford the old repayment, keeping it is the cheapest extra repayment you will ever make. What you should not leave alone is the first point.

The two sentences

Every major lender runs a retention team whose entire job is to stop you leaving. They are not reached through the general line and they do not act on vague dissatisfaction. They act on a specific, credible alternative.

“I have a written offer at a lower rate from another lender and I am comparing discharge costs this week. What is the best rate you can put on this loan today?”

Said in that order, with a real offer behind it, that request is answered on the spot far more often than borrowers expect. If it is declined, you have lost eleven minutes and gained a clear reason to move — which is worth knowing either way.

Refinancing is not always the answer. Break costs on a fixed loan, a low balance, or a property that has not moved in value can all make staying the right call. But staying should be a decision you made, not one your lender made for you by staying quiet.