In a move set to reshape the Australian housing landscape, the Reserve Bank of Australia (RBA) has reduced the official cash rate by 0.25%, bringing it down to 3.85%—its lowest point in more than two years.
This marks the second rate cut of 2025 and the first since the federal election, sending a clear signal that the RBA is responding to easing inflation and a more fragile global economic outlook.
“Mortgage Repayments has estimated the savings Australians could see across different loan sizes, based on a current average mortgage rate of 6.01% for new borrowers.”
| Remaining repayment | Monthly repayments (assumed current rate of 6.01%) | Monthly repayments with a 0.25% cut |
| $1,000,000 | $6000 | $5840 |
| $750,000 | $4500 | $4380 |
| $500,000 | $3000 | $2920 |
| $250,000 | $1500 | $1460 |
So what does this mean for buyers, sellers, and the broader property market?
Buyer Confidence Rebound
With interest rates now at their lowest since early 2023, borrowing power is set to increase, giving prospective buyers a significant boost in confidence. Some economists estimate that average borrowing capacity could rise by up to $75,000.
While affordability has been a concern for many Australians—especially following the prolonged rate hike cycle—this cut is expected to revive demand, particularly among first-home buyers and upgraders.
Will Property Prices Rise?
According to industry experts, including PropTrack economist Eleanor Creagh, property prices are expected to continue rising, although at a more modest pace compared to the boom years.
“The rate of growth is likely to be more modest compared to recent years,” Ms Creagh said. “The trade tensions and volatility in global markets have escalated, reinforcing the need for caution and flexibility in setting policy.”
Nevertheless, the combination of lower interest rates and a still-tight housing supply could nudge prices upward, especially in popular growth corridors and family-friendly suburbs.