We asked our managing director, Don Crellin, for his insights heading into the new year.
1. What is your outlook for interest rates in 2025, and how might they impact WA borrowers?
Interest rates are heading south, with cuts expected to commence anywhere between February and May as inflation stabilises. By late 2025, we anticipate variable rates will drop from around 6.8% to around 5.75%, significantly reducing borrowing costs. For WA borrowers, this creates a prime opportunity to either enter the market and purchase their first home, consider an upgrade or if staying put, shop around for a better deal. Lower rates will also inject more confidence into buyers, giving them the flexibility to negotiate better deals in a less pressured environment.
2. What external factors do you believe will most influence interest rates and borrowing trends in 2025?
The Reserve Bank’s focus on meeting sustainable inflation targets will be the biggest driver of rate cuts in 2025, both the timing and the quantum. As cost-of-living pressures ease, households will feel more confident about saving and spending, creating a positive ripple effect in the property market. Additionally, federal and state programs like the Help to Buy shared equity scheme and stamp duty reforms will influence borrowing trends by making homeownership more accessible for first home buyers and upgraders. These external factors combined will reshape the market in 2025.
3. Do you foresee any significant changes in mortgage conditions in 2025
We’re likely to see lenders competing aggressively, introducing lower rates and creative products to attract borrowers. Short-term fixed rates, particularly if priced below current variable rates, could become more popular as a way for borrowers to lock in short-term savings. Meanwhile, government support programs are expected to expand, including more tailored options for first home buyers. Overall, 2025 will be defined by increased borrower choice and stronger negotiating power.
4. For borrowers looking to refinance or purchase in 2025, what should they consider when planning ahead?
Falling rates and increasing housing stock make 2025 a year of opportunity but planning ahead is critical. Borrowers should focus on timing—working with their broker to monitor market movements and secure the most competitive terms. Refinancers should consider whether to stick with variable rates or lock in short-term fixed options to maximise savings. For buyers, understanding loan options and accessing government schemes like Help to Buy could be the difference between dreaming and achieving homeownership and brokers can help identify the best strategy to achieve homeownership.
To find out how your borrowing power may change in 2025, contact your local Resolve mortgage broker.