The Reserve Bank of Australia (RBA) just made a move that could shake up the property market in 2025: it cut the interest rate by 0.25%, bringing the cash rate down to 4.10%.
This is the first cut we’ve seen in years after 13 consecutive increases between 2022 and 2023. While it won’t send shockwaves just yet, it’s an important shift that could impact buyers, investors, and homeowners alike.
What does this mean? Should you jump into the market now or wait? Let’s break it down.
Why Did the RBA Finally Cut Rates?
After two years of hammering us with rate hikes, the RBA is now easing up. Why?
- Inflation is slowing down. It dropped to 3.2% in December, much closer to the RBA’s target of 2–3%.
- Spending is cooling off. We have been feeling the squeeze, and the economy needs some breathing room.
- Wages have stabilised: The rapid pay rises contributing to inflation are starting to level out.
Simply put, the economy is slowing just enough for the RBA to cut rates without risking another inflation spike.
How Much Does This Actually Save You?
Let’s be honest—a single 0.25% cut isn’t going to change your life overnight. But it does make a difference:
| Loan Amount | Previous Monthly Rate (4.35%) | New Monthly Rate (4.10%) | Monthly Savings |
|---|---|---|---|
| $500,000 | $1,812.50 | $1,708.33 | $104.17 |
| $750,000 | $2,718.75 | $2,562.50 | $156.25 |
| $1,000,000 | $3,625.00 | $3,416.67 | $208.33 |
It’s not massive, but hey, every dollar counts. And if more cuts come later in the year, those savings start to add up.
More importantly, this cut increases borrowing power. With lower rates, banks adjust serviceability assessments, reducing stress test buffers. This means buyers who were previously just short of qualifying may now be eligible for higher loan amounts, giving them access to properties that were out of reach before.
Is This the Start of a Property Boom?
I wouldn’t go that far, but this cut is definitely fueling confidence among buyers. And confidence = more competition.
Right now, the biggest problem is supply. We don’t have enough properties hitting the market, and when you mix that with increased buyer demand, what happens? Upward pressure on prices.
Here’s how different price brackets are responding to the rate cut:
- $700K-$1M range: Expect intense competition—this range attracts both first-home buyers and investors, keeping demand strong regardless of rate cuts.
- $1.5M+ properties: Less affected—buyers at this level tend to be less reliant on borrowing, so rate cuts won’t drastically shift demand here.
- Affordable end: Likely to feel the most immediate impact as more buyers who previously couldn’t qualify for loans now enter the market, increasing competition fast.
Bottom line? If more sellers don’t list their properties soon, prices will climb.
Should You Buy Now or Wait?
A lot of buyers ask me, “Michael, should I wait for more cuts?” Here’s my take:
🚫 Don’t try to time the market.
✅ Buy when you can afford it.
✅ Get pre-approved and act fast when you find a good deal.
The reality is that trying to pick the perfect moment is a losing game. What matters most is buying a good property at a fair price and holding onto it for the long term.
Another key point is that the best properties sell quickly when competition increases. If you wait for rates to drop further before jumping in, you may miss out on the best opportunities.
Will There Be More Rate Cuts?
Maybe. The RBA is being cautious, but if inflation keeps trending down, we might see another rate cut in the middle of the year.
However, keep in mind:
- More cuts aren’t guaranteed. If inflation stabilises, the RBA could hold rates steady for longer.
- Even if rates drop again, property prices could rise faster. The more competition there is, the more buyers will push prices up.
- With another cut, your borrowing power could improve slightly, but that won’t matter much if home values climb faster than your savings.
Strategies to Remain Ahead
If you’re serious about buying this year, here’s how to win in a competitive market:
- Get your finances sorted NOW. Pre-approval is your best weapon.
- Be ready to move fast. The best properties are getting snapped up quickly.
- Make strong, clean offers. Don’t cut corners—give sellers a reason to choose you.
- Focus on quality. A great property in a solid location will always hold value.
This rate cut is a signal that change is coming. The question is: will you be ready?
Thinking About Your Next Move? Let’s Talk.
Let’s chat if you’re feeling uncertain about approaching the market in this new environment. With years of experience in the Central Coast property market, I can help you interpret these changes specifically for your situation and goals.
Contact me today for a no-obligation consultation about positioning yourself for success in this evolving property landscape.
