The official cash rate has dropped to 5.25 per cent with banks either passing on part of the cut or reviewing their rates.

Young couple Kevin Squires and Gabrielle Trumper moved into their first home together in May and have a variable interest rate so they were thrilled at the cut.

The pair said it couldn’t have come at a better time.

“It’s brilliant timing coming up to Christmas,” Mr Squires said.

“The cut brings the repayments down a bit.”

Ms Trumper said the cut eased the pressure on the Tamwort couple a bit.

Mr Squires said depending on what rate cut their bank passed on ,they could now start to save up for home renovations instead of just paying the mortgage.

“We bought in April when the interest rates were nearly at their highest and then had a rate rise,” he said.

“We were umming and ahhing about when would be the best time to buy a house.

“If the rates had started to head up too much we would have felt the pinch but this is brilliant.

“If it keeps plummeting down like this we will fix the interest rate.”

They said it was hard to know what was going to happen with interest rates in the future but were pleased with the way rates were decreasing.

The Housing Industry Association (HIA) said a household with a mortgage of $300,000 would save about $150 per month after the latest cut.

“The interest rate cuts to date provide an opportunity for many Australians to enter the home ownership market for the first time,” HIA chief executive officer Chris Lamont said.