After months of holding the line, the Reserve Bank of Australia has finally delivered some welcome news for Aussie borrowers. At its May board meeting, the RBA announced a 25 basis point cut to the official cash rate, bringing it down to 3.85%.
While this move may not be the silver bullet for every household, it’s a clear step toward easing financial pressure for the millions of Australians currently on variable home loan rates.
Here’s how the 25 basis point cut could translate to monthly savings:
| Loan Amount | Old Repayment | New Repayment | Monthly Savings |
|---|---|---|---|
| $500,000 | $3,240 | $3,164 | $76 |
| $600,000 | $3,888 | $3,797 | $91 |
| $750,000 | $4,860 | $4,746 | $114 |
| $1,000,000 | $6,480 | $6,328 | $152 |
Based on an average variable rate of 6.06% over 25 years.
CBA and NAB have been first to announce that they will be cutting their rate by 0.25% effective from the 30th May. We are anticipating the all lenders will follow and pass on the full cut. You can check and see when and what lenders are passing on by clicking here.
Home value movements
Property values across tcontinue to rise nationally, with CoreLogic recording a 0.3% rise in values for the month.
Every capital city recorded a positive change, with Darwin leading the charge with a1.1% increase. Regional areas also saw prices on the rise (up 0.6% across April). In Perth we saw a further 0.4% growth for the month. Values have increased in Perth by 10% in the last 12 months taking the median price to
“The rate cut in February supported an upwards inflection in housing market conditions, but the positive influence from lower rates seems to be losing some potency. At the same time, household confidence slipped in April, with the US’s ‘Liberation Day’ tariff announcements and the upcoming federal election causing uncertainty. It is likely this may be causing some buyers and sellers to delay their decisions,” said Tim Lawless, Cotality’s research director.
Mr Lawless said these uncertainties are more apparent in sales and listings volumes compared to home values – a trend compounded by the ‘super break’ many Australians took between Easter and ANZAC public holidays.”
“With further rate cuts likely as soon as May 20th, and a level of certainty returning to the market after the federal election on May 3rd, we expect a further modest rise in values for 2025.”
Home buyer updates
With Labor’s re-election there a few changes ahead for first-home buyers.
- First Home Guarantee
Changes to the caps on prices along with the lifting of restrictions on salaries.
- Help to Buy Scheme
Government will share equity in a property (up to 30% on existing and 40% on new build), with only a 2% deposit required. Salary caps have increased along with price caps.
- Reserved Homes for First Home Buyers
Government to invest in 100,000 new homes to be reserved for first home buyers.
- WA Stamp Duty Changes
Wa Government announced on 25th March changes to first home buyer stamp duty. Effective from 21st March, threshold for zero duty increased to $500k from $450k and rebate rates increased to $700k. Whilst great news, buyers will have to claim back the difference in future.
The federal schemes will still need passing through parliament and are anticipated to come into effect later this year. For more information click here.
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