‘Breathing room’: Rate cut means Sarah can ‘splurge’ on Easter eggs this year

Mother of three Sarah O’Donnell’s weekly budget has been so tight to cover her Lane Cove mortgage repayments that she was considering skipping on Easter eggs for her kids this year.

“I don’t think my kids will get the Easter bunnies. They might get a block of chocolate, as it might be cheaper,” she laughed.

But Tuesday’s rate cut announcement by the Reserve Bank means the Easter bunny will visit again. “It gives us a little more breathing space that we afford those items such as the Easter bunny … we can splurge on those little, tiny things that the kids love,” O’Donnell said.

Sarah O’Donnell, with 8-month-old Sophie, welcomes the “breathing room” afforded by the rate cut.Credit: Nick Moir

For the first time in more than four years, the RBA has provided relief for home owners, with governor Michele Bullock announcing an interest rate cut of 0.25 of a percentage point on Tuesday.

Credit: Matt Golding

O’Donnell, who has just started working again after maternity leave, said the financial pressure on young families like hers means the rate cut was long awaited.

“There is a lot of pressure on especially young families because we don’t go back to work full-time – usually most of the mums – so we’re having to work on less of an income [with] more kids, more mouths to feed,” she said.

“Any dollars that we can save makes a big difference. It pays for extracurricular activities or healthcare … this will definitely be a saving for us.”

The 0.25 percentage point rate cut would reduce repayments on a $600,000 mortgage by $100 a month. Since the bank began lifting rates in 2022, repayments on that mortgage have risen by almost $1500 a month.

For Renuka Senthevadiel, a single mother living and working in south-west Sydney, saving $100 a month could be the difference between taking her son to the cinema or sticking to her strict budget.

“I am very excited and relieved. It just gives me a bit of breathing room … I’m less anxious about the next few months,” she said.

Single mother Renuka Senthevadiel says the RBA’s rate cut will allow her to afford to take her son to the cinemas.Credit: Steven Siewert

“It allows me to save for my emergency fund, have a bit of a buffer, maybe do something for the two of us that we enjoy. We love going to the movies so doing a one-off treat like that is amazing.”

Senthevadiel bought her Cabramatta home eight years ago and shopped around for a mortgage with a better interest rate. She doesn’t think she’d be able to afford to buy a home now and is saving for her son, who she thinks will need her financial help to become a home owner.

“I’m hoping that me having a mortgage will mean that at some point I can secure my son to have a space in the Sydney property market, because it would be impossible for him to ever do that [on his own].”

The nation’s four major banks, Westpac, National Australia Bank, ANZ and the Commonwealth Bank of Australia, have announced that they will pass on the rate cut in full to mortgage holders from February 28.

Flora Grant and her wife Liz Astey bought their dream Newtown terrace in 2021. Once little Franklin came along, the pair soon realised that they needed to upgrade.

Flora Grant (right) with wife Liz Astey and baby Franklin welcome the news of a rate cut as they transition to a larger family home.

“We’re in the process of selling and buying, so it actually gives us a lot of confidence that that’s hopefully the first cut, and that rates will be on their way down overall … [it] makes us feel confident to be taking out a new mortgage,” Grant said.

Grant, who was also on maternity leave while interest rates were at their peak, said hopefully the rate cut would prove an incentive for buyers so her family can swiftly transition into a new, larger home.

“The reality of having a family means you need more space, and so we knew that a rate cut would be coming this year at some point, but we weren’t confident that it would happen in the first half of the year.”

Treasurer Jim Chalmers said the rate cut was “very welcome” for millions of people.

“Now, we know that it won’t fix every challenge we have in our economy and household budgets, but it will help,” he said at a press conference in Canberra on Tuesday.

Jordon Le Breux, 26, who is one year into repaying the mortgage on his investment property in Sefton in Sydney’s west, welcomed the rate cuts “with open arms”.

Jordon Le Breux is a 26-year-old who has just bought into the Sydney property market.Credit: Steven Siewert

“Every month when my repayments come through, I am always very fearful that I have enough money. This obviously gives me a lot more confidence,” he said.

Le Breux still lives at his parents’ home, and while he considers himself “lucky” compared to his peers who have moved out earlier than him, his ultimate goal is to buy a family home closer to the city.

“[A rate cut will mean] a bit more reassessing my goals … I can either reinvest in some property, either make additional repayments, or take advantage of lower cost of borrowing.”

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