The Reserve Bank of Australia has decreased the official cash rate in their February meeting to 4.10%.
Interest rates are finally on the way down. So, what does this mean for the average homeowner or first-time buyer?
Breathing room has finally arrived for home-owners and people wanting to get into the market. After 13 relentless interest rate hikes the Reserve Bank of Australia (RBA) has made its first cut since 2020. For the average homeowner, this could deliver real relief of around $104 in monthly savings on an average $642,000 owner-occupier home loan at 6.27%.
The impact goes beyond savings too because borrowing power will be increasing. This means a first-time buyer who previously qualified for $535,000 may now be able to borrow an extra $11,000 while couples on average salaries could see their borrowing capacity increase by $19,000 to reach $886,000, without facing higher repayments (based on rates from four major lenders*).
The move marks a turning point. Inflation is finally cooling, and the RBA’s data-driven approach shows we’re entering a long-awaited easing cycle. For first home buyers, it’s confidence that repayments have peaked and from here should start to ease. For upgraders, it’s the boost they need to make their next move. And for existing borrowers, it’s an opportunity to build equity faster by keeping repayments steady as rates fall.
What can you expect next?
Expect banks and lenders to fight hard for market share, with sharper deals in the pipeline. The benefits are clear with more money in pockets, greater borrowing power, and renewed confidence in what’s ahead. While no one can truly predict what can come, this cut confirms the RBA is following the data. With December inflation providing welcome news, all eyes are now on how quickly further rate cuts will unfold. For now, borrowers can take heart: the tide is finally turning.
Are you a homeowner wondering how your repayments could change?
As a starting point, you can use a simple online calculator to give you an idea of how your repayments could change with rate changes. Try Resolve Finance’s repayment calculator. However, the best option is to get in contact your Resolve mortgage broker to find out exactly where you stand in terms of your repayments and your personal situation.
The key to any market change is understanding exactly what it could mean for you and staying focused on your personal finance goals. Your Resolve Finance mortgage broker is here to help you with any questions you may have.
Important information
*The increased borrowing capacity of a single is calculated on the average Australian income of 100K; couples based on $100k and $75k income, no dependents or debt. Expenses based on HEM, using average current rates across major 4 lenders and assuming a rate reduction of 25 bp.
Correct as at 18/02/25. Information on this page does not consider your personal needs and financial circumstances and you should consider whether it is appropriate for you. Lenders terms and conditions apply and may vary. All Financial services provided by Resolve Financial Solutions Pty Ltd trading as Resolve Finance ABN: 65 079 545 378 Australian Credit Licence No. 385487