Published: 25.2.25
In early February the Reserve Bank of Australia (RBA) announced its first interest rate cut since November 2020, much to the relief of 60%+ of Australian households managing a current mortgage.
At the time of writing all four major banks believed the RBA will reduce the cash rate multiple times this year – anywhere from two cuts to five cuts with some predicting we will go as low as 3.10%. Predictions are of interest but there are no guarantees.
My number one tip to make the most of interest rate cuts, is to talk to your finance broker, ask for a home loan review, and find out if there is anything further you can do to better your current finance arrangements. This means researching multiple banks, not just your existing bank.
When you consider that something as small as a 0.25% reduction in interest rate can equal savings of $100 a month or $1,200 a year on a $600,000 loan (based on an average variable rate of 6.33% p.a), it’s a 30-second call well worth making.
I work with borrowers and banks every day and witness firsthand how these changes are influencing different segments of the market, including first-home buyers, existing borrowers, and property investors. Here’s my take on lower rates and potential impacts in 2025:
For borrowers with variable rate loans, the recent cuts translate into immediate savings. Reduced interest rates mean lower monthly repayments, freeing up household budgets and allowing many to breathe a little easier. This is particularly beneficial for those who have been grappling with cost-of-living pressures and rising inflation.
Many existing borrowers are now exploring refinancing opportunities, seeking to lock in lower rates or negotiate better terms with their existing lenders. If you haven’t reviewed your mortgage recently, now is an excellent time to assess your options for a more competitive home loan. Please reach out if you’d like me to help you with your review.
Lower interest rates are also creating favourable conditions for first-home buyers, making homeownership more accessible. Reduced borrowing costs mean improved affordability and higher borrowing capacity, enabling buyers to enter the property market sooner than anticipated.
However, with increased affordability comes increased competition. More buyers in the market could drive property prices higher, particularly in sought-after suburbs. First-home buyers should act strategically, securing pre-approval early and working with professionals to navigate the buying process efficiently. Making sure you access all benefits and grants available to you is also important and could even help you to get into your first home sooner.
The interest rate cuts are also reinvigorating the property investment market. Lower borrowing costs enhance rental yield returns make investing in real estate more attractive. Investors who previously hesitated due to high interest rates may now re-enter the market, leading to increased activity in both residential and commercial property sectors.
With property values potentially rising due to increased demand, investors should carefully assess market trends and future growth potential before making decisions. Now is a great time to review existing investment loan structures to ensure they remain aligned with financial goals.
The 2025 rate cuts are a game-changer for Australian mortgage holders, offering relief and opportunities across the board. Whether you’re a first-home buyer, an existing borrower, or an investor, strategic planning is key to maximising these benefits. Make the most out of current conditions by staying informed, reviewing your mortgage annually, and seeking expert guidance to make the most of the changing market conditions.
If you’d like to discuss how you can make interest rate reductions work for you, whether it’s finding savings on your existing mortgage or taking the next step on the property ladder, let’s talk!
THE FINEPRINT: The information provided on this site is on the understanding that it is for illustrative and discussion purposes only. While all care and attention are taken in its preparation any party seeking to rely on its content or otherwise should make their own enquiries and research to ensure its relevance to your specific personal and business requirements and circumstances.
Green Finance Group Pty Ltd ACN 145 035 221 is authorised under LMG Broker Services Pty Ltd ACN 632 405 504 Australian Credit Licence 517192.
“My approach is built on integrity, attention to detail, and a commitment to simplifying the lending process. I take pride in making finance stress-free by breaking down complex structures and guiding clients every step of the way.”
Level 1 / 161 Robertson St, Fortitude Valley Qld 4006
An ex-banker with proven expertise in navigating the loan application process to find you a better home, investment or business loan option or even negotiate savings on your current lending.
Before joining the Green Team in 2023, I honed my lending skills with over a decade’s worth of experience in senior lending and credit analysis roles covering all aspects of home, personal and small business loans with top international and Aussie banks including Lloyds Bank (UK), Westpac and Bank of Queensland.
