Are You on the Best Rate? Reserve Bank Cuts Interest Rates. It’s Time to Talk.

RBA Cuts Interest Rates – What Should You Do Now?

This week, the Reserve Bank of Australia (RBA) cut the official cash rate by 0.25% to 4.10%. This marks the first-rate reduction since November 2020 and comes in response to a sharper-than-expected slowdown in inflation to 3.2%. While financial markets and experts predicted this move, it was likely a closer decision than many expected.

Key Highlights from the RBA Meeting

Here are the key takeaways from the recent RBA’s decision and announcement:

• Inflation remains the main concern – While inflation has dropped significantly since its 2022 peak, it still sits above the RBA’s target range, and measures of underlying inflation remain elevated.
• A cautious approach to future cuts – The RBA will continue to monitor inflation closely and has signaled that further rate cuts will be gradual.
• Predictions for future rate cuts – Markets currently expect another rate cut in July, with no further easing until early 2026. However, the long-term trajectory remains uncertain.
• How low will rates go? – Financial markets predict the cash rate will bottom out around 3.5% before gradually rising again, but the RBA has indicated that rates may not fall that low.
• Immediate relief for borrowers – The big four banks have agreed to pass on the full 0.25% rate cut to borrowers, with new rates taking effect by the end of February.

Impact on the Property Market

The property market has already slowed, and this rate cut could help stabilise conditions.

• Sydney & Melbourne house prices have been falling – Since peaking in September 2023, Sydney’s home values have declined by 1.7%, while Melbourne’s have fallen by 7% since March 2022.
• Other capital cities are levelling out – Adelaide, Brisbane, and Perth have seen price growth slow, with auction clearance rates and time-on-market indicators softening.
• Stabilisation expected – This rate cut is expected to help steady property prices, particularly in Sydney and Melbourne, where values have been falling for four and ten months, respectively.

What Should You Do Now?

If you have a mortgage or are considering borrowing, now is the time to assess your financial position:
✔ Review Your Current Interest Rate – Check what you’re paying and compare it to the market. Not all banks pass on rate cuts equally.
✔ Negotiate with Your Lender – If your rate isn’t competitive, your bank may offer a better deal if you ask.
✔ Consider Refinancing – If your lender isn’t offering a good deal, refinancing could lower your repayments or give you more flexibility.

How Can Morrows Help?

If you or a family member want to ensure you’re getting the most competitive rate with the right lender, speak to your Morrows advisor today.

We can connect you with our trusted mortgage specialists, who have access to major lenders and private banks. They’ll provide an obligation-free finance review on commercial or residential loans. Helping you explore your options and secure a loan that aligns with your financial goals.