"RBA Cuts Interest Rates to 3.60% – What It Means for Australian House Prices in 2025"
"The RBA has cut the cash rate to 3.60%, the lowest since 2023. Discover how this move could impact mortgage repayments, boost buyer demand, and influence Australian house prices in 2025."
8/12/20251 min read
The Reserve Bank of Australia (RBA) has lowered the official cash rate by 0.25% to 3.60%, marking the third rate cut this year and bringing borrowing costs to their lowest level since 2023.
The move comes amid signs of easing inflation, softer job growth, and a slowing economy.
Why the RBA Decided to Cut Rates
Inflation cooling off – Price growth has been trending back toward the RBA’s 2–3% target range, reducing pressure on households.
Economic growth losing steam – National GDP growth has slipped to just 0.2% annually, while unemployment has climbed to its highest level in several years.
Encouraging spending and investment – The rate cut is aimed at stimulating borrowing and supporting business activity.
How This Could Affect Homeowners
For borrowers, the cut means instant relief if their lender passes it on in full.
A $500,000 mortgage could see repayments drop by roughly $70–$75 per month.
On a $700,000 loan, savings may reach over $1,000 a year.
Major banks including Commonwealth Bank, Westpac, NAB, and ANZ have already confirmed they will pass the reduction to variable-rate customers.
Impact on House Prices
Short-term outlook:
More buyer activity – Lower rates increase borrowing power, which can draw more buyers into the market.
Price stability turning to growth – Some areas could see renewed competition and price rises after months of slower growth.
Long-term considerations:
Affordability challenges – While cheaper loans are good news for borrowers, first-home buyers could face more competition and rising prices.
Economic fundamentals matter – Wage growth, supply constraints, and employment trends will ultimately determine how far prices move.
Final Word
The latest RBA rate cut is a double-edged sword: it offers mortgage relief for current borrowers and could energise the housing market, but it may also reignite price growth, making it harder for some buyers to enter the market.
For anyone considering buying, selling, or refinancing, the next few months could be pivotal in shaping property trends.