The RBA interest rate cut in February is expected to be reflected in lender rates on commercial loans with specific rates varying with individual lenders. While the decision to cut rates was highly expected and most lenders passed on the cut to home mortgage holders promptly, a different scenario exists in the commercial lending sector.

The commercial loan sector operates differently from the mortgage and consumer credit sectors. Commercial loans – finance for businesses, is a vast and diverse market and is not as closely regulated as consumer credit. The Reserve Bank (RBA) decision possibly leaving businesses with continuing challenges navigating the market to find their best rate and their most suitable lender.

As specialists in commercial lending, we assist businesses to better understand the current scenario with an elaboration of the RBA’s February decision, possible outcomes from changes to how rates are set, and how operators can more easily secure affordable financing.

Reserve Bank February Interest Rate Cut

The RBA Board met in February to discuss Monetary Policy and announced a cut in the cash rate of 0.25%. Governor of the Reserve Bank, Michele Bullock, said in that announcement that the rate of inflation was getting closer to the RBA target of 2-3%. But noted the strength of the labour market and the Board’s caution in further Monetary Policy easing.

Uncertainties remain with both the domestic economy and the rate of the inflation and at an international level. Ms Bullock saying that if rates were cut too soon, the fall in inflation, referred to as disinflation, may stall. As is normal, no indication as to when further cuts would be made were given in the statement or at the media conference, which followed the announcement.

When asked directly by a media representative when the next cut would come, Ms Bullock replied that she could not say. Reiterating the Board’s ongoing approach that all decisions are based on the available data and stressing that the February cut was not an indication that further reductions were ahead. Explaining that in making February’s difficult decision, arguments were presented for both a cut and hold.

What RBA Changes Mean for Another Interest Rate Cut

The February 2025 monetary policy decision was the last one to be made by the RBA Board. A major change comes into effect from March with the implementation of the Monetary Policy Committee. This is an advisory committee or board which will now determine rate decisions moving forward.

The creation of this new body was an outcome of the Reserve Bank Review conducted in 2022-23. Another change which has already come into effect is the move away from monthly one day monetary policy meetings to eight meetings per year held over two days.

How the new committee will approach monetary policy decisions has been a major discussion point by analysts and commentators. The appointees do include several RBA board members and Treasury Secretary Steven Kennedy, in addition to new members – Renee Fry-McKibbin and Marnie Baker. This new set-up will make its first monetary policy decision at its meeting over two days, 30 March to 1 April. Reports have the markets giving a rate cut decision at this first meeting a chance of 1 in 4. But as has been seen many times, the markets can be wrong.

Another interesting change which comes into effect from that first meeting is that the statement that announces the decision include the number of members for and against the decision, not attributed by name. This change is seen as providing markets with a better immediate indication of the level of consensus.

Navigating the Post Interest Rate Cut Market

The latest reduction in the cash rate is welcomed, but how will commercial lenders react? The commercial lending market includes the major banks, other banks and a swathe of non-bank lenders. Each has their own guidelines and analyst forecasts on which they base their rates. The market can be highly competitive, which is good news for businesses. But only if they have access to the most competitive lenders.

Quite a few non-bank lenders are not widely known as they do not provide finance directly to business customers. They operate solely via their selected broker network through accreditations. A fact which highlights a key benefit of using a broker to source commercial loans. We have accreditations with more than 80 lenders, including many non-bank credit providers, providing businesses with access to a vast market to source the most competitive rates through our services.

We are across which of our lenders have applied the latest rates cut to their products, ensuring we can continue to deliver those all-important best rates across our portfolio to our customers. All types of businesses can use our services to secure commercial loans for asset acquisitions, non-asset expenses, overdrafts and specialist finance facilities including Insurance Premium Funding and Debtor Invoice Finance.

While predicting future decisions on rates may be a challenge, navigating the commercial lending market can be easy when engaging with Business.Finance.  

To secure the most competitive rates following the latest RBA interest rate cut, contact Business.Finance on 1300 000 033.

DISCLAIMER: THE SPECIFIC PURPOSE IN PROVIDING THIS ARTICLE IS FOR GENERAL INFORMATION ONLY. IT IS NOT INTENDED AS THE SOLE SOURCE OF FINANCIAL INFORMATION ON WHICH TO MAKE BUSINESS FINANCE DECISIONS. BUSINESS OWNERS WHO REQUIRE ADVICE OR GUIDANCE AROUND THEIR SPECIFIC FINANCIAL CIRCUMSTANCES ARE RECOMMENDED TO CONSULT WITH AN ADVISOR OR ACCOUNTANT. NO LIABILITY IS ACCEPTED IN REGARD TO ANY MISREPRESENTATIONS OR ANY ERRORS RE ANY DATA, SPECIFICS, POLICIES AND OTHER INFORMATION AS SOURCED FROM OTHERS.