Millions of borrowers with a variable home loan have seen their interest rates drop in recent weeks after the Reserve Bank of Australia’s cash rate cut. The announcement was welcome news for those struggling with cost-of-living pressures.
For someone with a $600,000 mortgage and 25 years left on their loan, the cash rate cut meant their minimum monthly repayment would drop by around $92.
Meanwhile, in February we saw the housing downturn reverse, with Melbourne and Hobart leading the way. If you’re planning an autumn property purchase, talk to us about getting pre-approved on your finance early.
Interest rate news
The monthly Consumer Price Index indicator rose 2.5 per cent in the 12 months to January, according to the Australian Bureau of Statistics. Meanwhile, the annual trimmed mean – or underlying inflation – was 2.8% in January, up from 2.7% in December.
After the RBA’s February cash rate cut, Governor Michele Bullock said inflation had eased over the past three quarters and in the most recent quarter, a bit more than the RBA’s forecast had anticipated.
“It’s clear that higher interest rates have been working as anticipated, restricting economic activity and putting downward pressure on inflation,” she said.
“The Board judges it’s time to reduce a little bit of that restrictiveness, but we cannot declare victory on inflation just yet.
“It is not good enough for inflation to be back in the target range temporarily. The Board needs to be confident that (it) is returning to the target range (2 to 3 per cent) sustainably.”
The next cash rate announcement will be on 1 April.
There has been a lot of interest rate movement in recent weeks and lenders are offering sweeteners to get borrowers through the doors, so now is a good time to shop around.
To review your home loan, get in touch today. We can also explain your borrowing capacity in the current market, so please reach out.
Home value movements
Property values across the nation crept up in February, with CoreLogic recording a 0.3% rise in values.
Every capital city except Darwin saw property prices increase, with Melbourne and Hobart leading the monthly gains (both up 0.4%). In Melbourne, the uptick in prices follows 10 consecutive months of falling values.
Brisbane, Perth and Adelaide all continued to see monthly gains, albeit smaller than in Melbourne and Hobart.
CoreLogic research director Tim Lawless said the improved housing conditions had more to do with improved sentiment than any immediate improvement in borrowing capacity.
“Expectations of lower interest rates, which solidified in February, look to be flowing through to improved buyer sentiment,” he said.
“Along with the modest rise in values, we have also seen an improvement in auction clearance rates, which have risen back to around long-run average levels across the major auction markets.”
Regional housing conditions continued to show strong growth in February, with values across CoreLogic’s combined regionals index rising 0.4% over the month.
*Monthly Home Values figures as of 28 February 2025
*Australian auction results, clearance rates and recent sales for the week ending 9 March 2025
*The clearance rate is preliminary and current as of 11:30pm AEDT, 12 March 2025
With interest rates coming down, why not turn over a new leaf this autumn with an exciting new property purchase? Talk to us about getting pre-approved on your finance, so that you’re ready to negotiate with confidence.
Already have a home loan? Find out what lenders are offering and how you could benefit from refinancing. Please contact us for assistance.
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