This week’s 25 basis point rate cut marks the second reduction in three RBA meetings, reflecting growing confidence that inflation is under control and reinforcing the shift toward a more accommodative monetary policy stance.
With both headline and core inflation now within the RBA’s 2–3% target range — and no wage-price spiral emerging despite ongoing labour market tightness — the rate cut was widely anticipated. The immediate benefit for borrowers will be lower mortgage rates. For example, repayments on a $750,000 loan could fall by approximately $81 per month, with average variable rates expected to drop to around 5.81%.
In addition to financial relief, the move is expected to support consumer confidence, a key driver of housing activity. Historically, rate cuts have correlated with stronger housing turnover and, in many cases, upward pressure on property values.
However, it’s unlikely this will trigger a sharp rebound in prices. As the report notes, “we don’t expect a significant acceleration in capital gains” due to a combination of affordability constraints, conservative lending standards, and the fact that rates remain in restrictive territory, even after 50 basis points of easing.
Affordability remains a key challenge. All four housing affordability metrics tracked by Cotality were at or near record highs at the end of last year — a sobering reminder that lower rates alone won’t resolve the structural pressures facing many buyers.
For those navigating this evolving landscape, staying informed is essential.
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