RBA rate call August 2025: What it means for buyers, sellers, owners

News.com.au

3 days ago

Aussie homebuyer budgets could be up to $20,000 better off after an expected Reserve Bank interest rate cut today, but they've been warned to watch out for sellers jacking up prices.
Homeowners have been told to tip any savings they get on their home loan straight back into their mortgage balance — and to hold off fixing their home loan for at least a few more months.
Economists around the country have tipped the Reserve Bank to announce a 0.25 percentage point reduction to the cash rate on Tuesday.
'Sleeping giant': An Aussie city's housing market has begun waking up before a rate cut
It would bring the figure that underpins home loan repayments to 3.6 per cent, the lowest level since April 2023.
For a household with the $659,922 average Aussie mortgage, monthly repayments would drop from about $4224 to $4124.
A more generous, 0.5 percentage point cut would drop the figure to $4025, assuming a 25-year loan term and a starting variable rate of 5.93 per cent in line with the national average.
Prominent mortgage broker Melissa Gielnik said for would be buyers a 0.25 per cent cut usually translated to a $20,000 boost to their borrowing capacity — but they would have to be wary of sellers looking to jack up their price in response.
What A Cut Could Mean For Your Mortgage
$250,000 loan drops from $1600 a month to $1562 (0.25 cut) or $1525 (0.5 cut)
$500,000 loan drops from $3200 a month to $3124 (0.25 cut) or $3050 (0.5 cut)
$750,000 loan drops from $4800 a month to $4687 (0.25 cut) or $4574 (0.5 cut)
$1m loan drops from $6400 a month to $6249 (0.25 cut) or $6099 (0.5 cut)
Figures assume 5.93% current mortgage rate, 25-year loan term and no loan fees
Source: Moneysmart.gov.au
While most lenders, especially the big four banks, were very likely to pass on a predicted 0.25 per cent cut on Tuesday, Ms Gielnik said Victorians shouldn't be lulled into a sense of loyalty.
The Smart Lending founder said anyone on an about 5.5 per cent variable interest rate at present was doing well, and should expect to drop to 5.25 per cent or 5.3 per cent after the cut.
For everyone else, it might be time to change.
'But while there are some great fixed rates at the moment, with some at 4.99 per cent for two years, I do think it's too early to fix,' Ms Gielnik said.
'And I think there's more rate cuts to come, so if people can pay a higher amount off their loan after the next one, that forced savings will help you reduce debt.
'And maybe look at debt consolidation, bringing your credit card and car loan into your home loan if you can, which will help minimise costs on those repayments.'
Prominent buyer's advocate and Property Investment Professionals of Australia director Cate Bakos said with 'just as many vendors sitting back and waiting to list as we have buyers waiting to buy' there was a scenario where a rate cut might have a negligible impact at first.
'If we have a good number of vendors flood on to the market, and knowing the spring market is almost upon us, that could maintain the equilibrium of buyer and seller ratios,' Ms Bakos said.
'But if the vendors hold off, we are going to see prices really soar — because buyers are going to jump in.'
In either scenario Ms Bakos said renovated family homes would continue to gain ground, with a reserve bank cut likely to 'amplify' their already rising fortunes.
On the flip side, homes in need of an update were the least likely to respond.
'Renovators will remain unpopular, no matter the rate call,' she said.
In the event of the RBA holding again, the buyer's agent said it was likely buyers might not develop an expected increase in their sense of urgency for another six weeks when the next call is made.