Rate Cut Reality Check
We’ve had the much-anticipated cash rate reduction, with most lenders passing on the cut. If you’ve seen your mortgage rate go down, that’s great news. But before you sit back and celebrate, it’s worth asking – is your loan still the best option for you?
With more rate cuts possibly on the horizon, now is a great time to check in on your mortgage and explore your options.
Are we expecting more rate cuts?
Right now, nobody knows! Some major banks predict two to five more cuts in 2025. However, unlike past rate-cut cycles, where we’d typically see two quick reductions back-to-back, this time could be different.
Why? Inflation is still a concern. Rising electricity costs, slow wage growth, and ongoing cost-of-living pressures mean the RBA might pause for a few months before making another move.
So, what does this mean for you? Waiting for more cuts could cost you valuable time. Now might be the perfect moment to reassess your borrowing capacity, refinance, or even consider a property purchase before conditions shift again.
What happens when there’s a cash rate cut?
When the RBA lowers the cash rate, it typically leads to a reduction in interest rates across the economy. However, it’s important to note that while banks and lenders often respond by lowering their home loan interest rates, they’re not obligated to follow suit. And they can take their time…
Why a Rate Cut Should Trigger a Mortgage Review
Even if your lender passed on the latest cut, that doesn’t automatically mean you’re on the best deal. Here are a few reasons why now might be the best time for a mortgage review:
- The market is competitive – lenders are adjusting their rates al the time!
- Your borrowing power may have increased, opening up new opportunities.
- Your lender may not have passed on the full cut.
- Your goals might be different, your situation may have changed in the last year and you want to make sure your loan is keeping up!
Is Now a Good Time to Buy Property?
For anyone thinking about buying a home or investment property, this window of time presents an opportunity. Other potential buyers might be hanging on to see what happens with the next rate cut – after which competition in the market might start to increase driving up prices in the market.
Getting in their early could mean you can lock in a new rate, and a lower property price, before any further changes.
The Value of a Mortgage Review
Your strategy should keep up with interest rates! A review can:
✅ Make sure you’re on a competitive rate
✅ Explore refinancing options that better suit your needs
✅ Understand how rate cuts impact your financial goals
✅ Assess your borrowing power if you’re considering buying property
A rate cut is a great start, but taking action now could put you in an even stronger financial position.
