Interest rate cuts and the Australian property market – how to maximise the benefits of these changes

The Reserve Bank Board met today to determine the official cash rate target, which has now been lowered by 25 basis points, down to 4.10 per cent.  Several banks and lenders have already reduced rates in anticipation of this announcement. 

For prospective property owners, this is positive news in the short term, as rate cuts offer a window of opportunity to act on improved borrowing power, making it easier to enter the market.  

However, buyers should recognise that rate cuts may increase competition, particularly in popular metro areas. Better affordability typically drives more investor activity, potentially driving property prices up.  We urge buyers to act quickly to take advantage of current market offers and to have a well-planned loan strategy with pre-approvals lined up to stay competitive. 

Rates cuts will provide immediate relief to existing homeowners with variable-rate mortgages by lowering repayments and increasing household cash flow. Homeowners may also find this an opportune time to review existing loan structures and consider refinancing for a more competitive rate. 

With a 0.25% rate cut, borrowers with a $700,000 mortgage would save $113 monthly or $1,356 annually. Those with a $900,000 loan would see monthly savings of $145, amounting to $1,740 in annual savings. These calculations assume a 30-year loan term with rates decreasing from 6.25% to 6%. 

To maximise the benefits of these rate cuts, we recommend aspiring and current property owners prioritise:

1. Refinancing Opportunities – Now is the time for borrowers to assess their loan structures and explore better deals.
2. Locking in Competitive Rates – While rate cuts offer immediate relief, fixing a portion of your loan at historically low rates could provide longer-term certainty.
3. Strategic Investing – Lower interest rates can enhance investment opportunities, but buyers should remain focused on high-growth locations with strong fundamentals

Ultimately, while lower rates are positive, buyers and homeowners should approach decisions with a long-term strategy in mind.

To further assist first home buyers, it has recently been announced that banks will be allowed to overlook HECS-HELP and other student loans in debt calculations for home loans. This was something that Ello Lending Co. advocated for in its submission to the Senate Inquiry on Australia’s Financial Regulatory Framework and Home Ownership.

The change could provide another boost to borrowing power and simplify the process of applying for a loan, reducing some of the barriers to homeownership for many Australians.

Established in 2022 by YourLand Developments, Ello Lending Co. is a mortgage broking service that specialises in off-the-plan loans. With unanimous 5-star reviews across Google, and recently shortlisted as a finalist in The Adviser’s Better Business Awards 2025, Ello Lending Co. helps future homeowners navigate the unique requirements of land and construction finance.

The team of experienced mortgage brokers at Ello Lending Co. have access to competitive rates and provide a personalised service, making it easy for you to find the perfect loan for your needs.

To find out more about Ello Lending Co., visit www.ellolending.co or if you would like to reach out to the team directly, please call 0475 753 705 or complete a contact form on their website here and a member of the team will be in touch.