As of July 2025, the RBA cash rate stands at 3.85%, following two cuts earlier this year (one in February and another in May) bringing it below 4% for the first time in two years.
The Major 4 Banks predict up to two further rate cuts by the end of the year.
Each rate cut enhances household borrowing capacity and reduces mortgage repayments (provided the rate cut is passed on by the Banks).
Lower rates are reigniting consumer and investor optimism.
Interest rate cuts generally lead to an increase in property prices, some key points below:
- Boost affordability – lower repayments expand buyer eligibility and stimulate mortgage demand.
- Fuel price growth – national property values are expected to climb by 4–6%, with some markets outperforming dramatically.
- Encourage investor return – improved cash flow and lower rates will renew investor activity.
- Intensify equity gaps – first-home buyers face fierce competition, and supply deficits may worsen affordability.
What This Means for You
- Buyers: With cheaper finance (low interest rates/loan repayments), now might be good time to purchase, before the market increases too much.
- Investors: Capital gains and improved yields are likely. There may be an opportunity to release equity to assist with your next investment purchase (funds to pay for the deposit and related costs).
- Homeowners : Refinancing now could see lower repayments and assist your cash flow (more funds available to assist with the cost of living).
- Sellers : May want to hold off until property prices increase.
In summary, the RBA scheduled rate reductions in 2025 are poised to reignite property demand, propelling prices higher, though the pace may be steadier than past booms. Restricted supply, inflation dynamics, and regulatory action will crucially shape outcomes.
Written by
Gillian Burns
Mortgage Broker