RBA Relief: How the Rate Cut Affects You

REA Group senior economist Eleanor Creagh highlighted that the recent interest rate drop will boost both buyer confidence and borrowing capacity. With rates falling for the first time in 14 months, homeowners are likely to look to lenders to pass on the savings directly. PropTrack calculated the savings Australians could expect based on the current average mortgage rate of 6.26%, with the median house value in Australia at $796,000 according to the January 2025 Home Price Index.

Sydney, Brisbane, and Canberra remain the most expensive cities, while Perth and Adelaide have seen the most significant annual growth in property values. Despite high interest rates and the ongoing cost-of-living crisis, housing demand has remained strong, with affordability continuing to challenge the market. Following 23 months of growth, the market experienced its first downturn in December, with the January Home Price Index showing a slight decline amid increased stock for sale. Creagh suggested the recent price drops could be temporary, with improved affordability and buyer confidence potentially driving renewed demand and price growth.

Refinancing activity is expected to rise following today’s rate cut. Mortgage Choice CEO Anthony Waldron noted a 10% national increase in refinancing in the December quarter, reversing a previous decline. As the first of up to four rate cuts expected in 2025, this change is anticipated to spur further refinancing as borrowers seek better deals. Economists at Commonwealth Bank and Westpac predict three more rate cuts this year, while ANZ expects just one additional reduction.

Source: realestate.com.au. (2025, February 18). [RBA relief: Rates are cut – how much could you save?]